I really like this framing of the market as a subsidization!
To your confusion, both outcomes are indeed subsidized -- the observed asymmetry comes from the fact that the theft outcome is subsidized more than the non-theft outcome. This is due to the fact that the return on the "rack stolen" credit is a 100x profit whereas the "rack not stolen" credit is only a 1.01x profit.
If instead the "not stolen" credit cost $0.01 with a similar credit supply you would expect to see people buying "not stolen" credits and then not just deciding not to ... (read more)
Ahh, I had forgotten that "not stolen" shareholders can also take actions that make their desired outcome more likely. If you erroneously assume that only someone's desire to steal the rack -- and not their desire to defend the rack from theft -- can be affected by the market, then of course you'll find that the market asymmetrically incentivizes only rack-stealing behavior. Thanks for setting me straight on that!
I really like this framing of the market as a subsidization!
To your confusion, both outcomes are indeed subsidized -- the observed asymmetry comes from the fact that the theft outcome is subsidized more than the non-theft outcome. This is due to the fact that the return on the "rack stolen" credit is a 100x profit whereas the "rack not stolen" credit is only a 1.01x profit.
If instead the "not stolen" credit cost $0.01 with a similar credit supply you would expect to see people buying "not stolen" credits and then not just deciding not to ... (read more)