I’m a big fan of increasing efficiency. But I guess I would guess that proving optimality under certain conditions is not the best way to go about designing a system to be efficient? It’s probably part of the process for sure. (Epistemic status, very unsure here.)
The correspondence between theoretical and practical efficiency is definitely not perfect. Theoretical efficiency guarantees that individuals are properly incentivized. Practical efficiency may not follow because of things like computational costs, and the extent to which this will be a problem will depend on the specific mechanism and the situation in question. For example, in the computational cost case, the actions of large companies would probably be closer to optimal behavior than individual actions.
My hunch would be that proving theoretical efficiency is generally a relatively good proxy for practical efficiency in most cases, but these other practical considerations should be considered in addition to it, as further constraints that one is trying to satisfy. But this is an empirical question, and I’m also relatively uncertain here.
I’m a big fan of increasing efficiency. But I guess I would guess that proving optimality under certain conditions is not the best way to go about designing a system to be efficient? It’s probably part of the process for sure. (Epistemic status, very unsure here.)
Great point!
The correspondence between theoretical and practical efficiency is definitely not perfect. Theoretical efficiency guarantees that individuals are properly incentivized. Practical efficiency may not follow because of things like computational costs, and the extent to which this will be a problem will depend on the specific mechanism and the situation in question. For example, in the computational cost case, the actions of large companies would probably be closer to optimal behavior than individual actions.
My hunch would be that proving theoretical efficiency is generally a relatively good proxy for practical efficiency in most cases, but these other practical considerations should be considered in addition to it, as further constraints that one is trying to satisfy. But this is an empirical question, and I’m also relatively uncertain here.