The funding paradox: The more we trust EA fund-managers to make good decisions, the less inclined we are to think anyone publicly asking for money is worth giving money to. After all, the wise fund-managers would have funded them already if they were good.
It’s related to the Expert’s Paradox: An expert who’s able to discern other experts should (on first-order) be more inclined to update on their signals because they have justified confidence in their signals being good. But if experts start updating strongly on each others’ signals, now suddenly the signals are worse quality due to information cascades and proportionally watering down the total influence technical evidence (as opposed to testimonial evidence) has on their collective beliefs. Hence the paradox: the more experts are inclined to trust each other (first-order), the less they should be inclined to trust each other (second-order). The more efficient the market is, the more people are going to update on how efficient it is, which leads to the market becoming less efficient.
Additionally, if fund-managers tend to update on each others’ signals, it creates perverse incentives for charities to not ask for money. The best a charity can hope for in a world where everyone believes and updates on the efficient market hypothesis is that a fund-manager accidentally receives private information about their funding situation.
The point is that fund-managers should be very reluctant to update on each others’ decisions. The harm caused by reinforcing perverse incentives and watering down the epistemic commons just isn’t worth it.
The funding paradox: The more we trust EA fund-managers to make good decisions, the less inclined we are to think anyone publicly asking for money is worth giving money to. After all, the wise fund-managers would have funded them already if they were good.
It’s related to the Expert’s Paradox: An expert who’s able to discern other experts should (on first-order) be more inclined to update on their signals because they have justified confidence in their signals being good. But if experts start updating strongly on each others’ signals, now suddenly the signals are worse quality due to information cascades and proportionally watering down the total influence technical evidence (as opposed to testimonial evidence) has on their collective beliefs. Hence the paradox: the more experts are inclined to trust each other (first-order), the less they should be inclined to trust each other (second-order). The more efficient the market is, the more people are going to update on how efficient it is, which leads to the market becoming less efficient.
Additionally, if fund-managers tend to update on each others’ signals, it creates perverse incentives for charities to not ask for money. The best a charity can hope for in a world where everyone believes and updates on the efficient market hypothesis is that a fund-manager accidentally receives private information about their funding situation.
The point is that fund-managers should be very reluctant to update on each others’ decisions. The harm caused by reinforcing perverse incentives and watering down the epistemic commons just isn’t worth it.