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ChristianKl comments on Open Thread, Dec. 28 - Jan. 3, 2016 - Less Wrong Discussion

10 Post author: Clarity 27 December 2015 02:21PM

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Comment author: [deleted] 28 December 2015 03:36:02AM *  5 points [-]

I'm interested in talking to people knowledgeable in decision theory/bayesian statistics about a startup that aims to disrupt the $240,000,000,000 management consulting market. it's based on the idea of prediction polls, but done on the blockchain(the same thing bitcoin uses) in a completely decentralized way.

I'm particularly interested in people who can help me out with understanding/choosing alternative scoring rules besides Brier scoring.

I can't pay you for your time, but I can virtually order you a pizza or buy you a beer :).


edit: Here's the (still very rough) elevator pitch:

For a long time companies relied on a pretty fuzzy metric: People who seemed to be better at making good decisions got to make them. This worked out decently well, but led to one undesirable result: People who were good at making excuses about their decisions ALSO got to make decisions.

The thing was, we didn't really have a better way to do it. That is, until the data revolution. Suddenly, companies had access to tons of data that they could use to ACTUALLY make better decisions. The problem was, they weren't politically set up to make use of this data, because all the people in power were those who could make good excuses.

This is were management consulting companies came in. For really big decisions, the management consulting companies would come in as outsiders, charge a bunch of money, and use their clout to use the data to make big decisions (like how many people to fire). This industry rapidly grew to the 240 billion dollar industry it is today.

But there's a huge problem with the industry - there's no objective way to tell which companies are actually good at making decisions. This leads to a case where the only way to tell which companies are good is their name and reputation - which means a monopolistic signalling market where the very few who got in early and made a name for themselves get to overcharge for their name, and new cheaper players find it very hard to enter the market.

The solution: An objective metric(bayesian scoring rule) that shows how good an organization or individual is at predicting the future. The entire history of how the company got this score is available on the blockchain, so you avoid the signaling problem by making everything auditable and therefore not having to put your trust in any one brand or company.

Not only can this allow us to take over all the big problems that management consulting currently handles, but it opens up a whole class of smaller decisions that were simply cost prohibitive in the management consulting model, and creates a new paradigm for management as a result.


Edit 2: If you're effectively altruist minded, it may be of interest to know that the reason I'm interested in doing this is to drastically reduce the cost of impact assessments.

Comment author: ChristianKl 01 January 2016 06:57:41PM 1 point [-]

Why do you believe that management consulting companies are payed to predict the future?

Comment author: [deleted] 01 January 2016 08:31:03PM *  0 points [-]

I actually believe that management consulting companies are paid to help companies make big decisions. I believe this because usually they are hired when a company needs to make a big decision.

Decision theory shows us that a huge portion of making big decisions is making accurate predictions about the future (and the other pieces, such as determining an accurate utility function, are best left to the organizations themselves).

Comment author: ChristianKl 01 January 2016 08:42:07PM 1 point [-]

Decision theory shows us that a huge portion of making big decisions is making accurate predictions about the future

Where does it show us that's true?

More importantently how do you know that the customers of mangement consulting believe that's true? Do you think that the average Fortune 500 CEO invests resources into internal prediction making in a way to indicate that he believes this is true?

I think if the average Fortune 500 CEO would believe this to be true you would have much more internal prediction markets in companies. Programs for internal prediction markets that are not sold based on team building efforts but that are sold on actually producing actionable data.

Comment author: [deleted] 01 January 2016 08:53:49PM 0 points [-]

Where does it show us that's true?

I mean, I'm convinced by the math. You are welcome to disagree with the math, but you'll have to show me some other math that disproves everything that decision theorists have already figured out.

I think if the average Fortune 500 CEO would believe this to be true you would have much more internal prediction markets in companies. Programs for internal prediction markets that are not sold based on team building efforts but that are sold on actually producing actionable data.

We have different models here. In my model, Prediction Markets aren't used because politics are set up for people who can make excuses - prediction markets would remove the ability of those people to make excuses, so the political factions don't allow them. Management consulting firms solve this by coming in as an outsider endorsed by the fortune 500CEO (therefore bypassing most of the politics) and making those predictions themselves. I'm just trying to bring down the cost of these outsiders, so that the CEO can use them for many more decisions.

Comment author: ChristianKl 01 January 2016 09:04:53PM 0 points [-]

I mean, I'm convinced by the math. You are welcome to disagree with the math, but you'll have to show me some other math that disproves everything that decision theorists have already figured out.

The math depends heavily on the axioms that you use. It's quite easy to choose axioms in a way that you get the outcome you are looking for. The question is whether those axioms are warrented.

prediction markets would remove the ability of those people to make excuses, so the political factions don't allow them

Why can't the CEO order prediction markets to be created? Do you think the political factions wouldn't create markets if ordered to do so?

Comment author: [deleted] 01 January 2016 09:11:54PM 0 points [-]

The math depends heavily on the axioms that you use. It's quite easy to choose axioms in a way that you get the outcome you are looking for. The question is whether those axioms are warrented.

As I said, you're welcome to show me some axioms that show that forecasting is NOT a huge part of making big decisions.

Why can't the CEO order prediction markets to be created? Do you think the political factions wouldn't create markets if ordered to do so?

Because good CEO's understand that buy-in is essential for any project. You can order projects all day and alienate your workforce, but that's not how the fortune 500 CEOs got to be fortune 500 CEOs

Comment author: ChristianKl 01 January 2016 09:39:08PM *  0 points [-]

As I said, you're welcome to show me some axioms that show that forecasting is NOT a huge part of making big decisions.

The general idea is that big decisions get in most contexts made by experts via informed intuition and not by shutting up and calculating. The math at which you are looking is shut up and calculate math.

Because good CEO's understand that buy-in is essential for any project.

Do you think people get substantially more alienated if the CEO says: Let's do an internal prediction market then when he transfers the same power to management consultants? Especially when the consultants are suddenly forced by your system to not make politically acceptable suggestions but focus on true predictions?

Comment author: [deleted] 01 January 2016 11:44:36PM *  0 points [-]

The general idea is that big decisions get in most contexts made by experts via informed intuition and not by shutting up and calculating. The math at which you are looking is shut up and calculate math.

There's substantial room for both in prediction polls.

Do you think people get substantially more alienated if the CEO says: Let's do an internal prediction market then when he transfers the same power to management consultants?

The alienation doesn't tank the project because it's not being run by the people being alienated.