Expensive Shareable proof of some desirable quality
Your examples don’t seem to actually follow this, as false certificates seem to be available. If you instead say “evidence of”, this makes more sense, but is also way less surprising. Signaling is a competitive/adversarial game.
This is true for markets of goods and services, but false for markets of information and trust.
Huh? It’s not very true for goods and services, and it’s only a little more difficult for information or trust. It applies to all transactions (because all transactions are fundamentally about trust). There are many kinds of transactions, of course, for which we haven’t evolved (or have actively prevented) strong signals in the form of binding contracts or clear expectations from being available.
negative externality of lowering the percieved value of all similar uncertified goods.
And this is where you lose me. Failure to add value is not an externality. Good competition (offering a more attractive transaction) is not a market failure.
If you instead say “evidence of”, this makes more sense
Accepted and changed, I’m only claiming some information/entanglement, not absolute proof.
It applies to all transactions (because all transactions are fundamentally about trust)
Would it be clearer to say “markets with perfect information”? The problem I’m trying to describe can only occur with incomplete information / imperfect trust, but doesn’t require so little information and trust that transactions become impossible in general. There’s a wide middleground of imperfect trust where all of real life happens, and we still do business anyway.
And this is where you lose me. Failure to add value is not an externality. Good competition (offering a more attractive transaction) is not a market failure.
It sure looks like an externality when generally terrible things can happen as a result. I agree that being able to offer a better product is good, and being able to incentivise that is good if it can lead to more better products, but it does also have this side problem that can be harmful enough to be worth considering.
Signaling is a competitive/adversarial game.
Yeah, I know this idea isn’t completely original / exists inside broader frameworks already, but I wanted to highlight it more specifically and I haven’t found anything identical to this before. Thanks for the feedback.
I don’t think this is a useful model.
Your examples don’t seem to actually follow this, as false certificates seem to be available. If you instead say “evidence of”, this makes more sense, but is also way less surprising. Signaling is a competitive/adversarial game.
Huh? It’s not very true for goods and services, and it’s only a little more difficult for information or trust. It applies to all transactions (because all transactions are fundamentally about trust). There are many kinds of transactions, of course, for which we haven’t evolved (or have actively prevented) strong signals in the form of binding contracts or clear expectations from being available.
And this is where you lose me. Failure to add value is not an externality. Good competition (offering a more attractive transaction) is not a market failure.
Accepted and changed, I’m only claiming some information/entanglement, not absolute proof.
Would it be clearer to say “markets with perfect information”? The problem I’m trying to describe can only occur with incomplete information / imperfect trust, but doesn’t require so little information and trust that transactions become impossible in general. There’s a wide middleground of imperfect trust where all of real life happens, and we still do business anyway.
It sure looks like an externality when generally terrible things can happen as a result. I agree that being able to offer a better product is good, and being able to incentivise that is good if it can lead to more better products, but it does also have this side problem that can be harmful enough to be worth considering.
Yeah, I know this idea isn’t completely original / exists inside broader frameworks already, but I wanted to highlight it more specifically and I haven’t found anything identical to this before. Thanks for the feedback.