I agree with the arguments against diversification (mainly due to its effect on lowering the incentive for becoming more efficient), but here’s a concrete instance of how diversification could make cheating nonviable.
Example: Cheating to fake the signals costs 5,000$ (in other words, 5,000$ to make it look like you’re the best charity). There are 10,000$ of efficient altruism funds that will be directed to the most efficient charity. By faking signals, you net 5,000$.
Now if diversification is used, let’s say at most 1⁄4 of the efficient altruism funds will be directed to a given charity (maybe evenly splitting the funds among the top 4 charities). Faking the signals now nets −2,500$. Thus, diversification would lower the incentive to cheat by reducing the expected payoff.
I agree with the arguments against diversification (mainly due to its effect on lowering the incentive for becoming more efficient), but here’s a concrete instance of how diversification could make cheating nonviable.
Example: Cheating to fake the signals costs 5,000$ (in other words, 5,000$ to make it look like you’re the best charity). There are 10,000$ of efficient altruism funds that will be directed to the most efficient charity. By faking signals, you net 5,000$.
Now if diversification is used, let’s say at most 1⁄4 of the efficient altruism funds will be directed to a given charity (maybe evenly splitting the funds among the top 4 charities). Faking the signals now nets −2,500$. Thus, diversification would lower the incentive to cheat by reducing the expected payoff.