Have you thought about including an automatic inflation adjustment?
simon
Karma: 167
Yeah I think the obvious Bayesian reply is: Just make your prior less informative if you know less? It’s fine to choose it to be close to uniform over a very wide range if you know close to nothing.
I think the main concern is that people often use the expected value of such a wide distribution in utility maximisation. So the concerning part is the interaction between eg utilitarianism and Bayesian inference.
People in EA should definitely read more Feyerabend! (Or ask llms what Feyerabend would say about a topic etc).
For example “a complete theory of scientific epistemology” is something he’d most likely reject even as an ideal.
Bayesian inference and decision making are somewhat distinct steps.
EV maxxing is a specific (and specifically simple) objective function that you can plug Bayesian estimates into for decision making. It removes the need to think about distributions.I think it can be helpful to separate out the problems—eg I believe that there aren’t really any plausible alternatives to Bayesian inference (over future trajectories of the world as a function of your actions or similar) but I think there’s much more room for debate regarding the objective function.
The hedge fund industry is not based on this. Most hedge fund investors are sophisticated and they often pay more than 2%.
I see, fair.
What’s the alternative to “wide distribution stays wide?” in practice?Separately, “very wrong and narrow prior” is a problem of course, but very much intra-Bayesian and not a criticism of Bayesian reasoning?
Nice distinction!
I’d agree that pop-Bayesianism is overused while more rigorous Bayesianism is underused.
Can you elaborate? Do you mean “should” in the sense that it possibly ought not to do that or do you mean it might not be close enough? (In the latter case it seems to be more about specific parameters in practice rather than the concept itself?)
Reason 2 (edit: now 3) is not a valid criticism of correctly applied Bayesian thinking. If your initial guesses are arbitrary and weak and you are aware, you have a very wide prior. So updating will bring your posterior arbitrarily close to the right answer.
Of course it’s reasonable to criticise incorrectly applied Bayesian thinking or overconfidence in your prior, or too weak updating, or anchoring.
Yeah this has indeed never really been the definition of a hedge fund. Only a subset of hedge funds are approximately point-in-time market neutral.
It seems prudent that banks were quick to margin call him, they probably tightened this kind of stuff after archegos. They still had net assets, so this was early enough.
Their gains were from leveraged directional bets and their losses were from leveraged directional bets. Seems they were margin called, so their liquidity was squeezed—poor risk management. It seems that they have learned from this and are now using “fully paid for” derivatives, so presumably call options whose premium they can afford.
Hedge funds are not necessarily hedged, but eg long/short equity hedge funds are (while macro hedge funds can have all kinds of unhedged macro bets on.)Sadly it appears that adjacency to EA correlates with poor risk management, I’m wondering whether this is somewhat structural (beyond eg the age group…)
These podcasts are such a great format to learn about GiveWells work and to gain confidence in the process!
I think what makes this post a bit arm-chair-ish is the type of premise that reads like “the movement as a whole should do xyz”.
It’s fine, but it’s much nicer to read about “you as an individual actor should do abc (possibly to marginally influence the movement in direction xyz)” because that’s actually action-guiding? Part of the reason I like EA is the direct application of theory… by critically thinking individuals that can learn over time and do good regardless of a “movement”.
Very interesting that this article seems so controversial based on the comment section. From a donor side the overall point seems directionally pretty common sense to me, but this might be a reflection of my biases of course.
Perhaps one aspect that could be valuable is to provide a list of more independent advisors?
Also I guess helping Anthropic donors chat to other, similar donors might be helpful (although hard to find anyone at a relevant scale)?
Jack is plausibly knowledgable in this area and interacts with relevant donors, so it seems highly unlikely that “do not cold pitch because donors don’t like it” is bad advice—regardless of what you think other motives might be.
So you have got a question that you want to answer, and the goal is admirable, and you have stated a success criterion. However, don’t you think it might be healthy to also pre-commit to criteria around when to give up the experiment?
I burned some tokens iterating with Claude fable and ended up learning quite a bit here:
**The background: two ways of describing one problem**
A sequential decision problem can be written in *extensive form* — a tree with choice nodes (where you act) and chance nodes (where nature acts), with consequences at the leaves — or in *normal form*, where you list every complete contingency plan (“strategy”) and treat the problem as a single one-shot choice among those plans. Elga’s two-bet setup in extensive form is: choose accept/reject A, then choose accept/reject B. In normal form it’s one choice among four strategies: {BOTH, A-only, B-only, NEITHER}.
The anti-sequentialist move you were making in this thread is: since nothing happens between Elga’s nodes, the extensive form is a misleading picture and the normal form is the *real* problem. Call this **normal-form reduction**: rational choice in a tree must agree with rational choice among the tree’s strategies. It feels like a free, innocent principle — surely how a problem is *typeset* can’t matter.
Hammond’s theorem is the demonstration that it is not free. It is roughly the most expensive principle in decision theory.
**Hammond’s conditions**
In “Consequentialist Foundations for Expected Utility” (*Theory and Decision*, 1988), Peter Hammond starts not from preference axioms but from *behavior*: a “behavior norm” that specifies, for every finite decision tree, which moves are acceptable at each node. He then imposes three structural conditions:
*Consequentialism.* Acceptable behavior in a tree depends only on the consequences the available strategies deliver — not on the tree’s shape. Two trees whose strategies map to the same consequences must license the same consequences. This *is* normal-form reduction, stated as an axiom.
*Dynamic consistency.* The plan you’d endorse at the start is the plan your later selves actually continue; there is no predictable defection from your own strategy.
*Separability.* Behavior at a node in the middle of a tree is the same as behavior in the “snipped-off” subtree treated as a standalone problem starting there. Your past — the branch you traveled to get here — is normatively inert.
Plus an *unrestricted domain* assumption: the norm must deliver verdicts for every finite tree, not just convenient ones.
**The theorem, and why completeness falls out**
Hammond proves that any behavior norm satisfying these conditions is representable as maximization of expected utility: a complete, transitive preference ordering satisfying the independence axiom and — once chance nodes with subjective uncertainty enter — a single, precise probability function. Sharp credences, derived, not assumed.
The philosophically interesting part is where *completeness* comes from, since that’s what the imprecise probabilist denies. It comes almost embarrassingly cheaply, and seeing why is the heart of the counterattack. Behavior, unlike preference, is always decisive: put an agent in a tree offering x or y and she leaves the room having done *something*. Define “x is weakly preferred to y” as “x is choosable from some tree offering exactly {x, y}.” Since something is always choosable, this revealed relation is complete *by construction*. That’s trivial so far — a genuinely conflicted agent also picks something, perhaps arbitrarily, and we shouldn’t read a considered ranking off one forced pick.
Here’s the catch: incompleteness that can’t show up in any single choice can only ever show up as a *pattern across contexts* — choosing x over y inside one tree but y over x inside another, or refusing at a later node to complete a sequence your earlier choice began. Those context-sensitive patterns are precisely what consequentialism and separability forbid. Consequentialism says the embedding tree can’t matter; separability says your history can’t matter; dynamic consistency says your plan can’t come apart from your conduct. Jointly they seal every exit through which incomparability could behaviorally *express itself*. Whatever tie-breaking the agent does under conflict gets laminated, by the consistency conditions, into a single coherent ordering across all trees — and Hammond shows the standard money-pump/Dutch-book tree constructions then force transitivity, independence, and precise probabilities. An agent who satisfies all of Hammond’s conditions is *behaviorally indistinguishable from a sharp expected-utility maximizer*, whatever fuzzy inner life she reports.
**Why this is a counterattack on the anti-sequential polemic specifically**
Recall your polemic’s shape: Elga’s tree has no decision-relevant events between nodes, so reduce it to the normal form, pick from {BOTH, A-only, B-only, NEITHER} by policy-level maximality, exclude only NEITHER, and declare that imprecision survives with exactly the permissiveness Elga demanded.
Hammond’s theorem says: you just endorsed consequentialism (the reduction) and dynamic consistency (your policy-follow-through). If you *also* accept separability and unrestricted domain, the theorem grinds forward and hands you back completeness — and with it sharp probabilities. Your hammer, swung with full force, rebuilds Elga’s conclusion from the opposite direction. The reduction move is therefore not a safe harbor; it’s the first premise of a proof of SHARP.
So the anti-sequentialist *must* locate a Hammond condition to reject, and the only live candidate is **separability** — she must say that what’s rationally choosable at the B-node genuinely depends on the tree it sits in (whether an A-node preceded it). And now look at what Elga’s Sally argument actually is: it is a direct intuition pump *for separability*. Sally at the B-node after rejecting A, and Sally offered B alone, are stipulated identical in beliefs, options, and everything she cares about; Elga insists rationality must treat them alike. That is separability, stated in a vignette. The dialectic thus closes into a perfect circle: the polemic escapes Sally by reduction, Hammond shows reduction-plus-separability yields sharpness, so the escape requires denying separability, and Sally is the argument for separability. The whole debate was never about probabilities at all. It is a debate about one axiom of dynamic choice, and both sides’ machinery is downstream of it.
This is exactly the lesson of Teddy Seidenfeld’s companion paper from the same year (“Decision Theory Without ‘Independence’ or Without ‘Ordering’,” *Economics and Philosophy* 1988): once you take dynamic coherence seriously, you face a forced trilemma — give up completeness/ordering, give up independence, or give up one of the dynamic conditions (separability or consistency or reduction). You cannot keep everything, and no position gets to win by framing. McClennen’s resolute choice keeps ordering and reduction but drops separability; Levi and Seidenfeld keep separability-ish structure but drop ordering and accept lumpy behavior; Hammond keeps all the dynamic conditions and is thereby *committed* to sharp EU.
**The honest bottom line**
Hammond doesn’t refute the anti-sequentialist. His conditions are premises, and separability in particular is deniable — plenty of serious people deny it. What the theorem does is strip the polemic of its air of costlessness. “It’s obviously one decision typeset on two lines” presents normal-form reduction as bookkeeping; Hammond shows it is one third of an engine that manufactures completeness, so anyone wielding it owes an account of which sibling condition they’re rejecting and why the money-pump constructions that enforce it are toothless against them. That’s a real debt, payable in the separability literature — Seidenfeld, McClennen, Rabinowicz, Steele — rather than in polemic. The promotion I mentioned before stands, though: “which of Hammond’s axioms is false?” is a far better fight for the imprecise probabilist than “why did you burn $5?”
Yeah good point I should’ve asked Claude, too!
My sense is that (perhaps similar to others in the comment section?) I don’t buy that this problem set up is a sequential problem at all.
Yes this was clear—imho you underestimate how sophisticated investors in hedge funds (what you call “clients”) are. The best hedge funds charge way more than 2% and it can still be a rational investment. “Value to society” is not a criterion that matters. “Value to investors” is.
There are many mutual funds that charge over 1%, add little value and target unsophisticated investors. That’s the case where I buy your point.