29 Comments

A question is whether it is more efficient to subsidize prediction markets or pay a panel of experts.

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Yes, if we could cheaply change speed limit signs I would prefer they be set by markets.

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Prediction markets are neither simple crowds nor simple experts; they instead lean to be influenced by whichever is more accurate in each case.

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Prediction markets are very good at predicting things involving humans. They can also predict non-subjective things but are less valuable there. A prediction market on what you would get if you divide the circumference of a circle by the diameter would give an excellent result, but only because everybody knows the mathematicians already figured that out.

Another interesting issue is the known bias of the crowd to the less safe. (In contrast with the bias of experts to the too safe.) There would be a slight bias in the market for a higher speed limit, not because it's safer, but because I personally want to get there faster and have my own bad evaluation of the risk of speeding to do so.

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This is the key comparison - prediction markets against panels of experts - that I've never seen addressed on OB.

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Indeed -- so you propose the speed limit be set by markets, not highway engineers, politicians and car engineers? Of course in Germany they don't regulate the speed and have a better safety record than the USA

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Even with new world computers, I predict there will still be crude rules like speed limits, rules that don't take many context details into account.

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That's old-world-thinking regulation, created because people can't be trusted, and because when one person makes an unsafe action and learns, it doesn't mean the whole world learns. Not so for computers. When one car makes an error, it will get fixed and all the cars will never make that error again. In addition, you don't need a vehicle code because you can get the developers coding all the cars into a virtual room and just discuss what makes the most sense to deal with any on-road issue.

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As with speed limits and stoplights, regulation is usually crude relative to the details that products and customers consider. Even so, we often do approve such regulation.

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I had thought you wanted local evaluation. Yes, people could make evaluations of risk on broad classes of road, but developers will be constantly revising their tools, and reacting to not just all accidents, but all anomalies. So every day the answer will be different for each brand of car on different roads. This is one reason that generally is desired that deciding what vehicles can do on what classes of road is not something that would be regulated by the state directly. As such there is also no desire to have the state regulate based on information from markets. The general process today is the state, once it figures things out, creates functional safety standards, and manufacturers self-certify that they meet those standards, and then can be sued for more damages if they self-certified fraudulently.

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I don't at all see why market speculators need very local knowledge to estimate the average accident rate of, for example, summer rainy nights on freeways when humans are watching but not driving. Yes of course automation makers may also add constraints on when their products can be used. My post is about additional regulation that may be imposed.

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Markets would only estimate well if there are enough interested and motivated parties with access to knowledge that is very local. Of course we do have markets that judge accident rates already, they are called insurance companies, particularly mutual ones, and in spite of the fact there is huge, huge money to be made ($200B industry in USA) making better estimates, the most they have done is attempt to measure general driver quality with small devices in your car. But insurance companies are screwed with self-driving cars, as they will always know much less about the risk of the cars than the makers of the cars, whose job it is to understand and minimize the risk. As I describe at http://robocars.com/acciden... the types of accidents robocars have will be quite different from human causes, and unlike human mistakes, no cause will repeat because the developers will immediately make and push fixes to it. Human accidents are much more stochastic. Of course, mistakes (or misunderstood situations) by programmers may have some predictable aspects to them, but it's quite different from today's approaches.

But this is just one problem. Because the liability for accidents will fall on the developers, and this cost will dominate, they will be the ones deciding where there car will operate, and under what conditions. For many years to come their approach will be paranoid, so even if the markets can tell them a better estimate of risk for a given situation, they can't and won't use that information (other than in deciding where to focus effort on improvement.) They don't want to be in court saying, "We allowed the car to go in full automatic mode because the prediction markets suggested low risk in this situation, but they were wrong and oops, sorry about your husband." The juries will punish that.

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I did say there'd be one (or more) market per person driving! If we wanted, we could only use a few dozen situation buckets, defined by a few features like day/night, sun/rain/snow, freeway/other. And OF COURSE markets could estimate accident rates in such buckets. In fact, they could do so as well as any competing mechanism.

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There are a variety of issues with this proposal. It parallels the mistaken taxonomy of NHTSA's "levels" which focus entirely on how much human supervision is needed for a vehicle. Some (including Google) reject all the levels except for the top one, where no supervision is needed and the vehicle can run unmanned (and even has no steering wheel.)

Some have rejected the idea of standby supervision but like constant supervision (such as Tesla Autopilot, when used as instructed.) In supervised vehicles, there are no green roads, ever, or it's very dynamic (ie. it allows unsupervised operation in a traffic jam on the highway.)

For vehicles able to do unmanned operation, which is where the vast majority of the value and social change comes, and where the most serious teams are all working, there are no humans with time to bid in a prediction market; they are either not in the car or use this car specifically to not worry about driving issues.

Indeed the mental cost of this is far too high and reward too random. It's hard to imagine more than a small fraction of people having time and resources to notice that others have overestimated or underestimated safety and technlogical capability on each segment of road and bet against them.

I also would be skeptical of people buying shares based on accident rates. You don't want to be right. People are also notoriously bad at judging road safety, people gamble their lives on road safety evaluations and routinely fail, gambling money may not do better.

Currently, measuring the safety of these cars in different situations is an unsolved problem, but not in the sense of "could be solved by a market." People don't even know what metrics to use and what goals to attain. The liability falls upon the creators of the cars, and they must assure their safety as they have far more to lose than those betting in prediction markets.

Finally, the hope is that there will not be statutory regulation at all before the technology has shown some maturity. That is the traditional norm in auto regulation, but there is talk of changing it and doing pre-market regulation. This is controversial. My personal view is it would be disasterous. The tort sytem is more than enough incentive to be safe for now.

Developers of these cars are inventing new and breakthrough technologies to make them reliable and safe to levels never before seen in this class of engineering. Regulations (and prediction markets) can only express conventional wisdom and existing practice, they are poor ways of examining revolutionary and novel paths to safety.

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I wonder if you could very quickly get to the point where all interstate highways are always all green. That would satisfy me. To me driving around town is less boring.

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Another thing to consider is that the market for self driving cars may be bigger than the expense of pilots for the other things. Cost of everyone's time driving is huge so you could spend more money on automating driving and it still save more than it costs. How much is spent on pilots for example, that would be the maximum savings from complete automation of flights.

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