Mind · Strategy
InformationDividend#c78d
Acting on short-range information pays even when the long-range forecast is exactly right
Mechanism
An agent that relocates on daily information collects a payoff that survives a perfectly accurate long-range forecast, because a ten-day forecast of 80% sun still does not say which hours are sunny. The dividend requires two conditions: the short-range distribution is non-fractal, so it is not a shrunk copy of the long-range one, and transition costs are low enough to be worth paying. Plan high-level quantities as precisely as possible and leave everything below free to move.
Invariants
- The dividend does not depend on uncertainty about the long-range forecast
- No dividend exists when the short-range forecast is a scaled copy of the long-range one
- Transition costs must be below the difference between short- and long-range information
Failure modes
- Locking scope to protect an estimate and forfeiting the dividend the estimate was meant to enable
- Adding inertia and smoothing to reliable information, the right response only to noisy information
- Chasing short-range signals when transition costs exceed the gain
Where this came from
- Research On the Origin of Risk
People: Arne Steemers, Adam Timlett
Used by
Identity
The name is the hash of the definition. Change a word and it becomes a different pattern.
- Sema ID
sema:InformationDividend#mh:SHA-256:c78d682d828c0e7ff7599c5f3bd7f7d09e7f6b749766e5404a3c009ecda3c189- Reference
InformationDividend#c78d- Ring
- 1
- Tier
- 2