As Raemon says, knowing that others are making correct inferences about your behavior means you can’t relax. No, idk, watching soap operas, because that’s an indicator of being less likely to repay your loans, and your premia go up.
This is really, really clearly false!
This assumes that, upon more facts being revealed, insurance companies will think I am less (not more) likely to repay my loans, by default (e.g. if I don’t change my TV viewing behavior).
More egregiously, this assumes that I have to keep putting in effort into reducing my insurance premiums until I have no slack left, because these premiums really, really, really matter. (I don’t even spend that much on insurance premiums!)
If you meant this more generally, and insurance was just a bad example, why is the situation worse in terms of slack than it was before? (I already have the ability to spend leisure time on gaining more money, signalling, etc.)
It’s true the net effect is low to first order, but you’re neglecting second-order effects. If premia are important enough, people will feel compelled to Goodhart proxies used for them until those proxies have less meaning.
Given the linked siderea post, maybe this is not very true for insurance in particular. I agree that wasn’t a great example.
Slack-wise, uh, choices are bad. really bad. Keep the sabbath. These are some intuitions I suspect are at play here. I’m not interested in a detailed argument hashing out whether we should believe that these outweigh other factors in practice across whatever range of scenarios, because it seems like it would take a lot of time/effort for me to actually build good models here, and opportunity costs are a thing. I just want to point out that these ideas seem relevant for correctly interpreting Zvi’s position.
This is really, really clearly false!
This assumes that, upon more facts being revealed, insurance companies will think I am less (not more) likely to repay my loans, by default (e.g. if I don’t change my TV viewing behavior).
More egregiously, this assumes that I have to keep putting in effort into reducing my insurance premiums until I have no slack left, because these premiums really, really, really matter. (I don’t even spend that much on insurance premiums!)
If you meant this more generally, and insurance was just a bad example, why is the situation worse in terms of slack than it was before? (I already have the ability to spend leisure time on gaining more money, signalling, etc.)
Relevant: https://siderea.dreamwidth.org/1486739.html
It’s true the net effect is low to first order, but you’re neglecting second-order effects. If premia are important enough, people will feel compelled to Goodhart proxies used for them until those proxies have less meaning.
Given the linked siderea post, maybe this is not very true for insurance in particular. I agree that wasn’t a great example.
Slack-wise, uh, choices are bad. really bad. Keep the sabbath. These are some intuitions I suspect are at play here. I’m not interested in a detailed argument hashing out whether we should believe that these outweigh other factors in practice across whatever range of scenarios, because it seems like it would take a lot of time/effort for me to actually build good models here, and opportunity costs are a thing. I just want to point out that these ideas seem relevant for correctly interpreting Zvi’s position.