Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Markets are competitive if and only if P != NP

arxiv.org

Post reply on HN
Print view View original

11–20 of 176 posts

Re: Markets are competitive if and only if P != NP

#11

Post by roblabla »

vlovich123 wrote: post #5

> the collusion detection problem is computationally infeasible for markets satisfying a natural instance-hardness condition on their demand structure, rendering punishment threats non-credible and collusion unstable. And yet we’ve clearly observed stable price fixing cartels. Maybe the word “unstable” means too much or the game theory model used doesn’t describe the real world accurately. When theory is contradicted…

Or maybe the markets are actually proof that P = NP :^)

Re: Markets are competitive if and only if P != NP

#12

Post by MostlyStable »

I don't have the mathematical chops to really analyze this on my own. Is this a bigger deal than the fact that real world markets already violate all the theoretical assumptions (e.g. unimpeded access to new entrants, perfect information, etc.etc), and so, in practice are never perfectly competitive or efficient?

Re: Markets are competitive if and only if P != NP

#13

Post by [deleted] »

vlovich123 wrote: post #5

> the collusion detection problem is computationally infeasible for markets satisfying a natural instance-hardness condition on their demand structure, rendering punishment threats non-credible and collusion unstable. And yet we’ve clearly observed stable price fixing cartels. Maybe the word “unstable” means too much or the game theory model used doesn’t describe the real world accurately. When theory is contradicted…

[deleted]

Re: Markets are competitive if and only if P != NP

#14

Post by argv_empty »

kibwen wrote: post #3

Keeping in mind the mistake in the HN title (should be "P != NP"), the interesting part of the abstract is this: > Combined with Maymin (2011), who proved that market efficiency requires P = NP, this yields a fundamental impossibility: markets can be informationally efficient or competitive, but not both. (Note that Maymin is the author of both papers.)

Except Maymin 2011 fails to even establish that his narrow definition of "markets are efficient" (specifically, finding a profitable technical analysis) is actually in NP.

Re: Markets are competitive if and only if P != NP

#15

Post by xxpor »

api wrote: post #9

If markets were perfectly efficient, entrepreneurship would not exist. An entrepreneur is, at this level, someone who looks for an arbitrage opportunity in correcting a market inefficiency, usually of the form "there is a market for X, X could be provided, but X is not currently provided."

Seems like t is a very critical variable then. For example, you could imagine a particular market is "perfectly" efficient at the moment (however you want to define the boundaries of a particular market), and there is no opportunity. But then a completely unrelated company or university makes a fundemental advancement in materials science that fundamentally changes the landscape. An exogenous shock in other words.

In a certain sense I guess this is why every anti-trust suit fundamentally comes down to defining the market bubble more than anything else.

Re: Markets are competitive if and only if P != NP

#17

Post by AaronAPU »

api wrote: post #9

If markets were perfectly efficient, entrepreneurship would not exist. An entrepreneur is, at this level, someone who looks for an arbitrage opportunity in correcting a market inefficiency, usually of the form "there is a market for X, X could be provided, but X is not currently provided."

That seems to stretch the meaning of market inefficiency. Is the lack of unlimited free energy an inefficiency in a market? Because an entrepreneur who achieves that is going to do pretty well. I’d say that would be creating value not optimizing market efficiency.
Post reply on HN