I like the idea of the self-fulfilling prophecy point, and expect prediction markets to work that way, but am still not sure if that’s the outcome I’d actually expect.
I think it’s clearly true that there are at least some situations where dramatic overconfidence (above the self-fulfilling prophesy line) would make sense.
That said, these situations might be quite contrived, and in real life, the benefits of the extra accuracy in many situations might outweigh the costs in a few.
Entrepreneurs clearly gain specific benefits from portraying insanely optimistic stories, but perhaps more rational ones would lose some of these benefits but gain others.
One could definitely argue that you could use the bayesian mindset to decide not to use the bayesian mindset in some settings, which is already definitely the case (there are many situations where it’s just too expensive, for example). Similar to how it’s possible to use a good decision theory in order to agree to use “insane decision theory X” in “insane situation where using insane decision theory X is optimal”.
I like the idea of the self-fulfilling prophecy point, and expect prediction markets to work that way, but am still not sure if that’s the outcome I’d actually expect.
I think it’s clearly true that there are at least some situations where dramatic overconfidence (above the self-fulfilling prophesy line) would make sense.
That said, these situations might be quite contrived, and in real life, the benefits of the extra accuracy in many situations might outweigh the costs in a few.
Entrepreneurs clearly gain specific benefits from portraying insanely optimistic stories, but perhaps more rational ones would lose some of these benefits but gain others.
One could definitely argue that you could use the bayesian mindset to decide not to use the bayesian mindset in some settings, which is already definitely the case (there are many situations where it’s just too expensive, for example). Similar to how it’s possible to use a good decision theory in order to agree to use “insane decision theory X” in “insane situation where using insane decision theory X is optimal”.