At least in the simple theoretical case. Maybe in practice small-value projects don’t get funded.
Scott Alexander has stated that: “Since most people won’t create literally zero value, and I don’t want to be overwhelmed with requests to buy certificates for tiny amounts, I’m going to set a limit that I won’t buy certificates that I value at less than half their starting price.” I’m not sure exactly what “starting price” means here, but one could envision a rule like this causing a lot of grants which the retrofunder would assign some non-trivial value to nevertheless resolving to $0 value.
Surely this isn’t optimal, there’s deadweight loss.
It’s impossible to optimize for all potential virtues at once, though. I’m actually a bit of a self-professed skeptic of impact markets, but I am highly uncertain about how much to value the error-correction possibility of impact markets in mitigating the effects of initial misjudgments of large grantmakers.
One can imagine a market with conditions that are might be more favorable to the impact-market idea than longtermism. Suppose we had a market in upstart global health charities that resolves in five years. By default, the major funders will give to GiveWell-recommended charities. If a startup proves more effective than that baseline after five years, its backers win extra charitable dollars to “spend” on future projects (possibly capped?) -- but the major funders get to enjoy increased returns going forward because they now have an even better place to put some of their funds.
And this scheme would address a real problem—it is tough to get funding for an upstart in global health because the sure-thing charities are already so good, yet failure to adequately form new charities in response to changing global conditions will eventually mean a lot of missed opportunities. In contrast, it is somewhat more likely that a market in longtermist interventions is a solution in search of a problem severe enough to deal with the complications and overhead costs.
And it’s still exploitable and this suggests that something is broken.
I do agree that collusion / manipulation is a real concern here. By analogy, if you’ve looked at the history of Manifund’s sister site (Manifold Markets), you’ll see a lot of people concocting very clever ways to manipulate the system. I am pretty skeptical of majority self-funding for this reason. This whole idea needs to be empirically tested in play-money models and low-stakes real money environments before it is potentially ready for prime time. It is too underspecified for an investor to make big moves in reliance on (unless the project is something they almost would have funded absent the impact cert) or for retrofunders to strongly bind themselves to.
I also think that as a practical matter there has to be some quality pre-screen before projects go on the market. Otherwise, the coordination problems with too many projects for the funding available will get severe. If offers are too spread out as a result, then few projects will get enough to launch. And as a current micrograntor, I can already see that dumping too many lightly screened on a marketplace is going to disincentivize people making the effort to screen and then evaluate projects. Going back to manipulation, you’d have to manipulate your project enough to not get funded, but not so much as to fail the pre-screen.
I guess one final defense to manipulation is that retrofunders are on the honor system. If there is reason to believe that someone manipulated the system, they are not actually bound to buy those certificates. That option would need to be exercised rarely or the system would crumble . . . but it is there.
Scott Alexander has stated that: “Since most people won’t create literally zero value, and I don’t want to be overwhelmed with requests to buy certificates for tiny amounts, I’m going to set a limit that I won’t buy certificates that I value at less than half their starting price.” I’m not sure exactly what “starting price” means here, but one could envision a rule like this causing a lot of grants which the retrofunder would assign some non-trivial value to nevertheless resolving to $0 value.
It’s impossible to optimize for all potential virtues at once, though. I’m actually a bit of a self-professed skeptic of impact markets, but I am highly uncertain about how much to value the error-correction possibility of impact markets in mitigating the effects of initial misjudgments of large grantmakers.
One can imagine a market with conditions that are might be more favorable to the impact-market idea than longtermism. Suppose we had a market in upstart global health charities that resolves in five years. By default, the major funders will give to GiveWell-recommended charities. If a startup proves more effective than that baseline after five years, its backers win extra charitable dollars to “spend” on future projects (possibly capped?) -- but the major funders get to enjoy increased returns going forward because they now have an even better place to put some of their funds.
And this scheme would address a real problem—it is tough to get funding for an upstart in global health because the sure-thing charities are already so good, yet failure to adequately form new charities in response to changing global conditions will eventually mean a lot of missed opportunities. In contrast, it is somewhat more likely that a market in longtermist interventions is a solution in search of a problem severe enough to deal with the complications and overhead costs.
I do agree that collusion / manipulation is a real concern here. By analogy, if you’ve looked at the history of Manifund’s sister site (Manifold Markets), you’ll see a lot of people concocting very clever ways to manipulate the system. I am pretty skeptical of majority self-funding for this reason. This whole idea needs to be empirically tested in play-money models and low-stakes real money environments before it is potentially ready for prime time. It is too underspecified for an investor to make big moves in reliance on (unless the project is something they almost would have funded absent the impact cert) or for retrofunders to strongly bind themselves to.
I also think that as a practical matter there has to be some quality pre-screen before projects go on the market. Otherwise, the coordination problems with too many projects for the funding available will get severe. If offers are too spread out as a result, then few projects will get enough to launch. And as a current micrograntor, I can already see that dumping too many lightly screened on a marketplace is going to disincentivize people making the effort to screen and then evaluate projects. Going back to manipulation, you’d have to manipulate your project enough to not get funded, but not so much as to fail the pre-screen.
I guess one final defense to manipulation is that retrofunders are on the honor system. If there is reason to believe that someone manipulated the system, they are not actually bound to buy those certificates. That option would need to be exercised rarely or the system would crumble . . . but it is there.