In particular, we can let oraculars pay to mark projects as having been strongly net negative, and have this detract from the ability of those who funded that project to earn on their entire portfolio.
I think this approach has the following problems:
Investors will still be risking only the total amount of money they invest in the market (or place as a collateral), while their potential gain is unlimited.
People tend to avoid doing things that directly financially harm other individuals. Therefore, I expect retro funders would usually not use their power to mark a project as “ex-ante net negative”, even if it was a free action and the project was clearly ex-ante net negative (let alone if the retro funders need to spend money on doing it; and if it’s very hard to judge whether the project was ex-ante net negative, which seems a much more common situation).
Seems essentially fine. There’s a reason society converged to loss-limited companies being the right thing to do, even though there is unlimited gain and limited downside, and that’s that individuals tend to be far too risk averse. Exposing them to a risk to the rest of their portfolio should be more than sufficient to make this not a concern.
Might be a fair point, but remember, this is in the case where some project was predictably net negative and then actually was badly net negative. My guess is at least some funders would be willing to step in and disincentivise that kind of activity, and the threat of it would keep people off the worst projects.
There’s a reason society converged to loss-limited companies being the right thing to do, even though there is unlimited gain and limited downside, and that’s that individuals tend to be far too risk averse.
I think the reason that states tend to allow loss-limited companies is that it causes them to have larger GDP (and thus all the good/adaptive things that are caused by having larger GDP). But loss-limited companies may be a bad thing from an EA perspective, considering that such companies may be financially incentivized to act in net-negative ways (e.g. exacerbating x-risks), especially in situations where lawmakers/regulators are lagging behind.
Yes, and greater GDP maps fairly well to greater effectiveness of altruism. I think you’re focused on downside risks too strongly. They exist, and they are worth mitigating, but inaction due to fear of them will cause far more harm. Inaction due to heckler’s veto is a not a free outcome.
Companies not being loss-limited would not cause them to stop producing x-risks when the literal death of all their humans is an insufficient motivation to discourage them. It would reduce a bunch of other categories of harm, but we’ve converged to accepting that risk to avoid crippling risk aversion in the economy.
I think this approach has the following problems:
Investors will still be risking only the total amount of money they invest in the market (or place as a collateral), while their potential gain is unlimited.
People tend to avoid doing things that directly financially harm other individuals. Therefore, I expect retro funders would usually not use their power to mark a project as “ex-ante net negative”, even if it was a free action and the project was clearly ex-ante net negative (let alone if the retro funders need to spend money on doing it; and if it’s very hard to judge whether the project was ex-ante net negative, which seems a much more common situation).
Seems essentially fine. There’s a reason society converged to loss-limited companies being the right thing to do, even though there is unlimited gain and limited downside, and that’s that individuals tend to be far too risk averse. Exposing them to a risk to the rest of their portfolio should be more than sufficient to make this not a concern.
Might be a fair point, but remember, this is in the case where some project was predictably net negative and then actually was badly net negative. My guess is at least some funders would be willing to step in and disincentivise that kind of activity, and the threat of it would keep people off the worst projects.
I think the reason that states tend to allow loss-limited companies is that it causes them to have larger GDP (and thus all the good/adaptive things that are caused by having larger GDP). But loss-limited companies may be a bad thing from an EA perspective, considering that such companies may be financially incentivized to act in net-negative ways (e.g. exacerbating x-risks), especially in situations where lawmakers/regulators are lagging behind.
Yes, and greater GDP maps fairly well to greater effectiveness of altruism. I think you’re focused on downside risks too strongly. They exist, and they are worth mitigating, but inaction due to fear of them will cause far more harm. Inaction due to heckler’s veto is a not a free outcome.
Companies not being loss-limited would not cause them to stop producing x-risks when the literal death of all their humans is an insufficient motivation to discourage them. It would reduce a bunch of other categories of harm, but we’ve converged to accepting that risk to avoid crippling risk aversion in the economy.