[HN Gopher] The Modern Curse of Overoptimization
___________________________________________________________________
The Modern Curse of Overoptimization
Author : jger15
Score : 25 points
Date : 2024-05-03 15:23 UTC (7 hours ago)
(HTM) web link (freddiedeboer.substack.com)
(TXT) w3m dump (freddiedeboer.substack.com)
| DarkNova6 wrote:
| A much more interesting article than the title alone alludes to
| (unrelated to code).
|
| See his definition of overoptimization:
|
| > My current working definition of overoptimization goes like
| this: overoptimization has occurred when the introduction of
| immense amounts of information into a human system produces
| conditions that allow for some players within that system to
| maximize their comparative advantage, without overtly breaking
| the rules, in a way that (intentional or not) creates meaningful
| negative social consequences. I want to argue that many human
| systems in the 2020s have become overoptimized in this way, and
| that the social ramifications are often bad
| pixl97 wrote:
| >without overtly breaking the rules
|
| Well, I'd add, and break the rules (Realpage).
|
| I'd say the modern system is closer to a perfect information
| system, but asymmetries in that system allow the players
| capable of raising the most capital to purchase any players
| that are undercapitalized. With the consolidation of players
| and the dependence on overcapitalization the remaining players
| in the market keep prices high via instantly communicated
| retail prices on websites. Lowering prices will most likely not
| gain long term customers, only short term customers feeding on
| the lower prices, and will likely lead to reduced profitability
| for that quarter.
| JZL003 wrote:
| Another example which I once posed to a regulator, is satellite
| information as public permitted insider trading. There are firms
| who buy satellites imagery (only available commerically, or even
| paying for a satellite to go to certain locations) to look at the
| shadows oil storage containers. You can see the relative levels
| of oil storage to predict the oil market. This is vaguely
| solvable by adding a false ceiling
|
| But more pernicious, check target parking lots to see how full
| they are, to predict approximate target's profit before their
| quarterly releases.
|
| Nominally this is totally public knowledge, but unless you can
| afford to pay for commercial imagery (or rent where it points)
| you would never know. Is that really a public market with
| globally relatively-equivalent knowledge
| tekne wrote:
| Counterpoint: isn't this exactly the _point_ of high-medium
| frequency trading (vs. investment) in the first place? That is,
| to incentivize people to search for and analyze information in
| a novel fashion and provide this information to the market
| through pricing? I feel insider trading itself is not an
| equality problem, but rather a conflict-of-interest problem,
| after all (especially if it's, e.g., someone working at a
| regulator doing the insider trading).
| pixl97 wrote:
| Not mentioned here: Realpage. Things like this have worked to tip
| the power of information towards the landlord and with collusion
| raise the price of rentals for everyone.
|
| But on to the first point of the article. Back in the early 2000s
| used to shop stores, especially Goodwill and hock the stuff out
| on ebay. It's nearly impossible to do that for two reasons now.
| One, goodwill will sell the product online for closer to optimal
| price taking as much profit as possible, or Two, the employees
| there snag any decent items they get and sell them online.
| 0dte wrote:
| I disagree with the author's first point-that the decrease in
| profitability of eBay middlemen due to more efficient algorithmic
| arbitrageurs is an example of overoptimization, creating negative
| social consequences through "hurting buyers by eliminating
| uncertainty that sometimes results in lower-than-optimal-to-
| sellers prices."
|
| In this example, these "lower-than-optimal" prices weren't passed
| on to the end consumers in the first place-instead, arbitrageurs
| like the author's friend would take advantage of them to gain a
| profit. The end prices that the average, uninformed buyer would
| see would therefore be inflated, with traders like the author's
| friend taking their cut.
|
| Sure, the rise of more efficient, algorithmic players decreased
| the profitability of less sophisticated middlemen like the
| author's friend. But, since these algorithmic players were more
| efficient, they were able to take less of a cut, leading to lower
| prices (and overall benefit) for the average buyer.
| koliber wrote:
| The author observes a phenomenon that is definitely happening but
| calls it an incorrect name. It's not over optimization. People
| are becoming richer and more people want access to things that
| were once exclusive. More people can afford that as well. Whether
| you call it "things got less expensive" or "more people got
| richer" is relative. The point is more people are competing for
| fewer resources.
|
| The author makes this sound like a bad thing. Often it does feel
| like that. On the other hand, more people are able to spend
| leisure time in places that were once only accessible to the
| rich. Is that bad? Not in my book. Does it cause crowds when
| taking the coveted Santorini sunset photo? You betcha.
| mst wrote:
| The tinder guide link shows an interesting failure mode (if true)
| -
|
| It ranks more attractive men higher
|
| Women see those first
|
| The most attractive men are mostly there for casual sex
|
| They get so many matches they can afford to be blatant and not
| necessarily polite
|
| Women there for relationships get tired of being hit on for
| casual sex
|
| Men lower down the attractiveness range but actually wanting a
| relationship are never seen by those women unless they swipe past
| the hot mansluts
|
| Men ignored, the women who might have been interested in them
| leave
|
| (the author of said link is pretty clear he thinks this sucks for
| everybody and thinks it's entirely fair for the women to bail out
| on their crap experience, so ... plausible)
___________________________________________________________________
(page generated 2024-05-03 23:02 UTC)