Comment by jay on Intuitive differences: when to agree to disagree · 2009-09-30T22:46:17.041Z · score: 0 (0 votes) · LW · GW

All of this is coming from a book on chaos theory I read ~5 years ago, so take it for what it's worth. As I recall:

Microscopic wind currents cause worldwide changes to the weather in about a month.

On a frictionless billiard table, extremely microscopic differences in initial conditions cause significant changes in the system after about a minute of collision, since each collision magnifies the difference between model and system results.

Plus, your claim was a claim about all systems. His claim was a claim about some systems. In general, you had the harder case to make.

Anyway, the wikipedia article was a good place to start, but probably not deep enough if these questions interest you greatly.

Comment by jay on Intuitive differences: when to agree to disagree · 2009-09-30T14:45:36.166Z · score: 0 (4 votes) · LW · GW

The mathematicians have pretty much answered this question. Point to Friend, and Kaj needs to read up on chaos theory. Chaos theory describes the types of systems that can't be well modeled if the model system deviates even very slightly from the system of interest.

Comment by jay on Another Call to End Aid to Africa · 2009-04-03T21:12:23.000Z · score: 1 (1 votes) · LW · GW

Logic and pity are by no means conflicting. Pity drives people to try to help Africans. Logic and evidence, when avalaible, show the results from any particular intervention. If people keep acting in a counterproductive manner, inertia and/or politics are running the show, not pity.

Comment by jay on The Pascal's Wager Fallacy Fallacy · 2009-03-19T03:01:09.000Z · score: 6 (6 votes) · LW · GW

Ask yourself if you would want to revive someone frozen 100 years ago. Most Americans of the time were unabashedly racist, had little concept of electricity and none of computing, had vaguely heard of automobiles, etc. They'd be awakened into a world that they don't understand, a world that judges them by mysterious criteria. It would be worse than being foreign, because the new culture's values were formed at least partially in reaction to the perceived problems of the past.

Comment by jay on Markets are Anti-Inductive · 2009-02-27T20:31:02.000Z · score: 0 (0 votes) · LW · GW

Jeremy and Doug,

There's less disagreement than you think here. Future net earnings enter the equation as future dividends (appropriately discounted) or share buybacks (driving up farther-future dividends and per-share liquidation value). I didn't specify that assets on liquidation had to be tangible; trademarks and the like are valuable (both because they improve the business as it operates and because they can be sold on liquidation).

If earnings are reinvested in the company, that's fine. The investments will be profitable or not; profitable investments will result in even more earnings. The cycle can continue until either (1) management decides that it has no further opportunity for reinvestment, and returns the now-compounded earnings to shareholders as dividends, or (2) investments are made that are unprofitable, and the money is wasted. Option 2 is a surprisingly popular choice.

In any case, a stock that has no dividends, no liquidation value, and no prospect of either of those facts ever changing is worthless. You may be able to convice a greater fool to buy it, but there's no actual wealth attached to the stock.

Comment by jay on Tell Your Rationalist Origin Story · 2009-02-27T04:14:18.635Z · score: -2 (14 votes) · LW · GW


Comment by jay on Markets are Anti-Inductive · 2009-02-27T03:10:16.000Z · score: 1 (1 votes) · LW · GW

Doug and Jeremy:

Generally, the fundamental value of a stock is determined by one of two things. It can be defined by the net present value of the future dividends of the stock. Alternately, it can be determined by the per-share liquidation value of the company's assets (after creditors are paid). Which one applies or what mix depends on whether and how the company will be liquidated.

The rest is a mix of market psychology and adjustments for risk/uncertainty.

A big wrinkle is that the many investors look for companies with major earnings growth potential. As a result, most traded companies try to give the appearance of major earnings growth potential. One way to signal growth potential is to allocate little or no cash to dividends, because using the cash for expansion (or for activities that superficially resemble expansion) signals that the company has strong growth opportunities. If investors believe this signal, then the stock price rises from its fair value as an existing business to its expected fair value as a much bigger company in the future. The management rewards everyone with bonuses and all is good, until the future arrives disappoints everyone.

I was going for a peacock analogy, but perhaps lemmings would be more appropriate.

Comment by jay on Markets are Anti-Inductive · 2009-02-26T02:22:06.000Z · score: 2 (2 votes) · LW · GW


You are not confused. You have clearly articulated the structure of a market bubble and its resulting crash.

Comment by jay on On Not Having an Advance Abyssal Plan · 2009-02-24T19:24:34.000Z · score: 1 (1 votes) · LW · GW

Here are some possible reasons for not wanting to explicitly plan for future failure, more at the level of the institute than at the level of the economy:

-The board wants to build consensus and forge a diverse group of people into a coherent whole. Telling some people that they are marginal would damage this focus.

-If a funding agency finds out that you can withstand an X% cut with vital operations intact, your odds of getting your grant cut by X% skyrocket.

-The board and officers are largely tasked with selling your concept to funding agencies. Given that funding agencies are usually risk-averse in practice (despite being risk-seeking in rhetoric), any suggestion that you might fail makes it harder to get funding.

You are making a conscious effort not to fool yourself. This habit of mind is excellent in a scientist or philosopher, but does not work well in contexts involving leadership, salesmanship, and negotiation.

Comment by jay on The Moral Void · 2008-07-03T10:55:00.000Z · score: 3 (6 votes) · LW · GW

Would you kill babies if it was inherently the right thing to do?

If it were inherently the right thing to do, then I wouldn't be here. Someone would have killed me when I was a baby.