Crypto’s inability to take debts or enact substantial punishments beyond slashing stakes is a huge limitation and I would like it if we didn’t have to swallow that (ie, if we could just operate in the real world, with non-anonymous impact traders, who can be held accountable for more assets than they’d be willing to lock in a contract.)
Given enough of that, we would be able to implement this by just having an impact cert that’s implicated in a catastrophe turn into debt/punishment, and we’d be able to make that disincentive a lot more proportional to the scale of its potential negative externalities, and we would be able to allow the market to figure out how big that risk is for itself, which is pretty much the point of an impact market.
Though, on reflection, I’m not sure I would want to let the market to decide that. The problem with markets is that they give us a max function, they’re made of auctions, whoever pays most decides the price, and the views of everyone else are not taken into account at all. Markets, in a sense, subject us to the decisions of the people with the most extreme beliefs. Eventually the ones who are extreme and wrong go bankrupt and disappear, but I don’t find this very reassuring, with rare catastrophic risks, which no market participant can have prior experience of. It’s making me think of the unilateralist’s curse. So, yeah, maybe we shouldn’t use market processes to price risk of negative externalities.
Crypto’s inability to take debts or enact substantial punishments beyond slashing stakes is a huge limitation and I would like it if we didn’t have to swallow that (ie, if we could just operate in the real world, with non-anonymous impact traders, who can be held accountable for more assets than they’d be willing to lock in a contract.)
Given enough of that, we would be able to implement this by just having an impact cert that’s implicated in a catastrophe turn into debt/punishment, and we’d be able to make that disincentive a lot more proportional to the scale of its potential negative externalities, and we would be able to allow the market to figure out how big that risk is for itself, which is pretty much the point of an impact market.
Though, on reflection, I’m not sure I would want to let the market to decide that. The problem with markets is that they give us a max function, they’re made of auctions, whoever pays most decides the price, and the views of everyone else are not taken into account at all. Markets, in a sense, subject us to the decisions of the people with the most extreme beliefs. Eventually the ones who are extreme and wrong go bankrupt and disappear, but I don’t find this very reassuring, with rare catastrophic risks, which no market participant can have prior experience of. It’s making me think of the unilateralist’s curse.
So, yeah, maybe we shouldn’t use market processes to price risk of negative externalities.