I wonder if, in addition to the section B.2, the clause could framed as a compensation scheme in favor of a firm’s shareholders—at least if it was adopted conditionally to other firms adopting it (a kind of “good cartel”). Since the ex ante probability of one specific firm A obtaining future windfall profits from an AGIis lower than the probability of any of its present or future competitors doing it (so driving A out of business), it might be in the interest of these firms’ shareholders to hedge each other by committing to a windfall clause. (Of course, the problem with this argument is that it’d only justify an agreement covering the shareholders of each agreeing firm)
You are not the only person to have expressed interest in such an arrangement :-) Unfortunately I think there might be some antitrust problems with that.
I imagined so; but the idea just kept coming to my head, and since I hadn’t seen it explicitly stated, I thought it could be worth mentioning.
I think there might be some antitrust problems with that
I agree that, with current legislation, this is likely so.
But let me share a thought: even though we don’t have hedge for when one company succeeds so well it ends up dominating the whole market (and ruining all competitors in the process), we do have some compensation schemes (based on specific legislation) for when a company fails, like deposit insurance. The economic literature usually presents it as a public good (they’d decrease the odds of a bank run and so increase macroeconomic stability), but it was only accepted by the industry because it solved a lemons problem. Even today, the “green swan” (s. section 2) talk in finances often appeals to the risk of losses in a future global crisis (the Tragedy of the Horizon argument). My impression is that an innovation in financial regulation often starts with convincing banks and institutions that it’s in their general self-interest, and then it will become compulsory only to avoid free-riders.
(So, yeah, if tech companies get together with the excuse of protecting their investors (& everyone else in the process) in case of someone dominating the market, that’s collusion; if banks do so, it’s CSR)
(epistemic status about the claims on deposit insurance: I shoud have made a better investigation in economic history, but I lack the time, the argument is consistent, and I did have first hand experience with the creation of a depositor insurance fund for credit unions—i.e., it didn’t mitigate systemic risk, it just solved depositors risk-aversion)
I wonder if, in addition to the section B.2, the clause could framed as a compensation scheme in favor of a firm’s shareholders—at least if it was adopted conditionally to other firms adopting it (a kind of “good cartel”). Since the ex ante probability of one specific firm A obtaining future windfall profits from an AGI is lower than the probability of any of its present or future competitors doing it (so driving A out of business), it might be in the interest of these firms’ shareholders to hedge each other by committing to a windfall clause. (Of course, the problem with this argument is that it’d only justify an agreement covering the shareholders of each agreeing firm)
You are not the only person to have expressed interest in such an arrangement :-) Unfortunately I think there might be some antitrust problems with that.
I imagined so; but the idea just kept coming to my head, and since I hadn’t seen it explicitly stated, I thought it could be worth mentioning.
I agree that, with current legislation, this is likely so.
But let me share a thought: even though we don’t have hedge for when one company succeeds so well it ends up dominating the whole market (and ruining all competitors in the process), we do have some compensation schemes (based on specific legislation) for when a company fails, like deposit insurance. The economic literature usually presents it as a public good (they’d decrease the odds of a bank run and so increase macroeconomic stability), but it was only accepted by the industry because it solved a lemons problem. Even today, the “green swan” (s. section 2) talk in finances often appeals to the risk of losses in a future global crisis (the Tragedy of the Horizon argument). My impression is that an innovation in financial regulation often starts with convincing banks and institutions that it’s in their general self-interest, and then it will become compulsory only to avoid free-riders.
(So, yeah, if tech companies get together with the excuse of protecting their investors (& everyone else in the process) in case of someone dominating the market, that’s collusion; if banks do so, it’s CSR)
(epistemic status about the claims on deposit insurance: I shoud have made a better investigation in economic history, but I lack the time, the argument is consistent, and I did have first hand experience with the creation of a depositor insurance fund for credit unions—i.e., it didn’t mitigate systemic risk, it just solved depositors risk-aversion)