> Robustness is something that seems to be very hard to measure, communicate and sell until something bad happens.
This is endemic to business and is especially widespread in contemporary American-style business, and the general case seems to be a failure in pricing all kinds of tail risk. I suspect a key challenge in this space is the unsolved principal agent problem.
I think the principal agent problem is rampant because pricing information is extremely lossy information compression; only the grossest outcomes are recorded in the market. Those who exploit the principal agent problem rely upon externalities to succeed, and those externalities are not timely or fine-grained reflected in the compressed/price information.
Reputation systems lossily add the missing information back into the market as a side-channel. But what externalities to record is a whole other can of worms.
This is endemic to business and is especially widespread in contemporary American-style business, and the general case seems to be a failure in pricing all kinds of tail risk. I suspect a key challenge in this space is the unsolved principal agent problem.
I think the principal agent problem is rampant because pricing information is extremely lossy information compression; only the grossest outcomes are recorded in the market. Those who exploit the principal agent problem rely upon externalities to succeed, and those externalities are not timely or fine-grained reflected in the compressed/price information.
Reputation systems lossily add the missing information back into the market as a side-channel. But what externalities to record is a whole other can of worms.