[HN Gopher] Understanding is poor substitute for convexity (2012)
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Understanding is poor substitute for convexity (2012)
Author : reese_john
Score : 58 points
Date : 2021-02-14 18:08 UTC (4 hours ago)
(HTM) web link (www.edge.org)
(TXT) w3m dump (www.edge.org)
| gerdesj wrote:
| "What allows us to map a research funding and investment
| methodology is a collection of mathematical properties that we
| have known heuristically since at least the 1700s and explicitly
| since around 1900 (with the results of Johan Jensen and Louis
| Bachelier)."
|
| Beautifully put yet so counter-intuitive.
| H8crilA wrote:
| A good case in point is small biotech companies focused on
| research.
|
| Technically traded on the capital markets as common stocks (and
| if there are enough adults in the room - without debt), but in
| reality the securities of such companies behave exactly like very
| convex options - whatever drugs the company is currently working
| on will either work or not. If it clicks, great, you get FDA
| approval and the stock is suddenly worth 5x or maybe even 50x
| more on the basis of patent royalties or outright drug sales. If
| not, the failed research operation is either recapitalized by
| patient investors or decomposed by liquidators, while the "real
| world resources" (researchers and equipment) find a new thing to
| do.
| conformist wrote:
| Yeah, nice example. I guess, the interesting aspect in that
| case is more that the option is way out of the money and almost
| binary, not so much its Gamma? Like, you still need to have
| some kind of idea about probabilities of outcomes to see
| whether the option is not crazy overpriced? This is similar to
| the "lottery ticket" critique addressed in the end ... you
| wouldn't just invest in _any_ biotech firm?
| HarryHirsch wrote:
| Dispersing the operation if things didn't pan out is actually
| the wrong approach and probably partly to blame for the poor
| results in Pharma these days. If you disband a research
| operation you lose all informal knowledge, and if you sell off
| assets separately you have to reassemble the instrument park
| again to start another company. In the past, when there were
| industrial research labs, the scientists and equipmetn would
| stay and be reassigned to another project.
| ncmncm wrote:
| The first few paragraphs seem ignorant, almost designed to drive
| away the impatient; but the following paragraphs demonstrate they
| lead to deep results.
|
| A key result for current society is that the system by which
| grants are apportioned by science foundations is absolutely
| counterproductive. The only mark in their favor is that they do
| issue grants, in smallish amounts to a large number of
| recipients. Demanding up front the expected outcome is the most
| harmful feature; they should instead favor the expectation of
| surprising results from new and poorly-understood phenomena.
|
| The failure of grants committees to foster development of mRNA
| vaccines is telling. That a for-profit company proved able to
| develop the technology does not mean that for-profit companies
| are good at research. Rather, it means that the bar for improving
| on the current system is very low.
| trhway wrote:
| >The failure of grants committees to foster development of mRNA
| vaccines is telling. That a for-profit company proved able to
| develop the technology does not mean that for-profit companies
| are good at research.
|
| well, may it be that the actual mRNA vaccine development wasn't
| much about fundamental science and the level of knowledge there
| had reached the state "ready to be productized", thus the grant
| committees were right?
| not2b wrote:
| This reads like someone who doesn't understand how evolution
| works. Even with a badly behaved utility function, gains can be
| made with a random process because less fit offspring die off,
| and more fit offspring survive and reproduce. Convexity is not
| required.
| dmichulke wrote:
| I believe Taleb sees the death of less fit offspring a small
| pain vs. the increased survival of fitter offspring - a big
| gain because it compounds with generations.
|
| Strangely, it also means that with the big brain and low
| numbers of offspring per pregnancy, human evolution itself
| turned away from high-mutation, high number of trials convex
| exploration to a more conservative exploitation of existing
| benefits.
|
| Are we already that close to the best we genetically could be?
| techbio wrote:
| It is not as strange when you see information move from
| sexual/asexual genetic reproduction, to markings on clay
| tablets and the mental diversity of human knowledge
| propagating with faster, more flexible fitness functions than
| the foundational survival/extinction binary. DNA is an
| arbitrary (albeit important) replicant and not at all the
| only form of physical memory.
| chrischattin wrote:
| It reads like someone who understands perfectly how evolution
| works. The point of anti-fragility is to make the losses non-
| fatal, and wins by proxy can be convex. The idea is you can
| keep playing the game. You might be looking at it from a
| species perspective vs an individual.
| H8crilA wrote:
| Exactly. And there are ways to make the system have far less
| convexity, for example by dampening the diversity of the gene
| pool. This is exactly the case with bananas, all of the
| world's supply is one virus or bacteria away from being
| completely wrecked.
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