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Markets are competitive if and only if P != NP

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

#151

Post by dreambuffer »

j05ev1f3 wrote: post #131
dreambuffer wrote: post #113

Earlier quoted context omitted.

But you can just give computers to each of those millions of people and propagate the information, instead of having less reliable humans doing it? That's kind of what's already happening.

The problem isn't transmitting information, it's how the knowledge is created. Some information only exists in peoples head until they act on it. Sometimes they don't even know it themselves until they're forced to make a decision.

Problem of course is that a lot of this information is junk even at scale, which is how you get people "deciding" to pollute, destroy their own health, start wars, etc.

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

#152

Post by Grosvenor »

My hypothesis is markets are fractally efficient and fractally competitive. Much like a strange attractor, they swing between states of efficiency and competitiveness.

The default regime is instability. Computational capacity is unstable through time, and the problem size itself changes (fractally) through time.

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

#153

Post by stouset »

ladberg wrote: post #125
stouset wrote: post #71

Earlier quoted context omitted.

The argument is not that you get better prices, it’s that you get accurate prices. First, this definition has always been circular: what’s the most accurate price? The one the market comes up with. More market, more accuracy! Second, there is never any reconciliation of the costs society is saddled with in order to chase arbitrarily more accurate prices, the most obvious of which is the massive quantity of fat skimme…

> First, this definition has always been circular: what’s the most accurate price? The one the market comes up with. More market, more accuracy! Market makers and HFT don't determine price: price is usually purely determined by the net inflows and outflows as decided by humans. MMs just smooth it out over time so everyone gets good pricing at the time and in the size they want it. > Second, there is never any reconci…

> By definition market makers are earning a fraction of the price improvement they provide

By definition, they’re making in aggregate essentially whatever the difference was between the “misprice” and the “true price”, assuming sufficient belief in both of these things. One of the parties in the hypothetically mispriced trade is bearing the loss. Their cut had to come from somewhere.

> As an index investor you should absolutely care! How do you think you are able to buy into the fund at a reasonable price?

You are relying on an interpretation of “reasonable” to intuitively mean “cheap” when in reality it means “accurate” in this context.

As an index investor, as long as it is accurate enough I don’t care. Any mispricing of assets up and down will come out in the wash.

Index funds existed well before HFTs were endemic. I have seen zero evidence that HFTs have caused index funds to net more of the gains from their underlying indexes.

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

#154

Post by mcdeltat »

ajkjk wrote: post #48
cs702 wrote: post #4

Very interesting. The author claims to have proved that markets can be informationally efficient or competitive, but not both. The implications for policy and regulation are significant. The author looks credible: https://philipmaymin.com/about-philip Thank you for sharing this on HN. -- To the mods: The title needs to be edited to replace the equal sign with not-equal.

The implications are not significant..? the real world is messy enough that this will not ever apply.

No bro you don't understand bro, supply and demand maths said capitalism is the only way forward bro and give me money now

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

#155

Post by vlovich123 »

narnarpapadaddy wrote: post #21
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…

Game theory here is applied to two fundamental market theorems. It’s a way to analyze the validity of those assumptions, rather than to build a new model. Empirical evidence to the contrary is expected given mutually inconsistent premises, which is what the author’s results predict. The author has simply used game theory math to disprove economist math.

Simple resolution: the market isn’t maximally efficient at all information discovery but it is optimally efficient as far as is practical. The economist math still works.

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

#156

Post by classified »

xxpor wrote: post #2

The actual paper's title is "Markets are competitive if and only if P != NP" Seems that HN's auto-headline rewriting in this case has made a critical error :) >Artificial intelligence, by expanding firms' computational capabilities, is pushing markets from the competitive regime toward the collusive regime, explaining the empirical emergence of algorithmic collusion without explicit coordination. I have to dig more i…

> Seems that HN's auto-headline rewriting in this case has made a critical error :)

Software trying to be smart always runs that risk.

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

#157

Post by casey2 »

ajkjk wrote: post #48
cs702 wrote: post #4

Very interesting. The author claims to have proved that markets can be informationally efficient or competitive, but not both. The implications for policy and regulation are significant. The author looks credible: https://philipmaymin.com/about-philip Thank you for sharing this on HN. -- To the mods: The title needs to be edited to replace the equal sign with not-equal.

The implications are not significant..? the real world is messy enough that this will not ever apply.

The vast majority of cash transactions are fired by a computer model so the implication are significant. It goes a long way towards explaining why increasingly financialized countries aren't experiencing noticeable real world improvement while also becoming increasingly extractive.

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

#158

Post by classified »

adrianmonk wrote: post #130
xxpor wrote: post #97

Earlier quoted context omitted.

Unless and until desktop OSes make typing symbols not on the keyboard as easy as iOS or Android, I can't be bothered.

It's pretty easy on Linux with the compose key. To get "≠", you just hit compose, then "/", then "=". That's actually the same number of keystrokes as "!=" (since "!" requires the shift key). For whatever reason, the OS documentation lacks a list of allowed compose key sequences. But they are intuitive enough that you can find many of them through experimentation. For example: Musical sharp ("♯"): compose + "#" + "#"…

The "compose" key was a new rabbit hole for me. Very handy.

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

#159

Post by kscarlet »

Honestly I think the author misunderstood and misused P != NP. They should have said something like "collusion is NP-hard". P = NP doesn't imply NP-hard problem is efficiently solvable in practice, but the author assumes so.

I was expecting some tight convergence analysis that rely exactly on some superpolynomial behavior. No, yet another fallacy about P = NP vs NP can be solved in practice. We have too many of these.

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

#160

Post by VVertigo »

adrianmonk wrote: post #130
xxpor wrote: post #97

Earlier quoted context omitted.

Unless and until desktop OSes make typing symbols not on the keyboard as easy as iOS or Android, I can't be bothered.

It's pretty easy on Linux with the compose key. To get "≠", you just hit compose, then "/", then "=". That's actually the same number of keystrokes as "!=" (since "!" requires the shift key). For whatever reason, the OS documentation lacks a list of allowed compose key sequences. But they are intuitive enough that you can find many of them through experimentation. For example: Musical sharp ("♯"): compose + "#" + "#"…

At least in Debian (Trixie), I have a list in: /usr/share/X11/locale/en_US.UTF-8/Compose
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