Even ChatGPT can figure out what’s going on" title="Even ChatGPT can figure out what’s going on" />

By Eric Peters, CIO of One River Asset Management

answers

“What happens when governments stifle innovation?” I asked

GPT4 responded: “When governments stifle innovation, it can lead to reduced economic growth, decreased competitiveness and a slower pace of technological advancement. Businesses may face regulatory barriers, restricted access to resources and limited incentives for research and development. As a result, talented people could seek opportunities in environments more conducive to innovation, causing a brain drain and hindering the nation’s progress.”

“Why would governments ever stifle innovation?”

GPT4 responded: “Governments can inadvertently stifle innovation through bureaucracy, excessive regulation or protectionist policies aimed at preserving domestic industries. They could also prioritize short-term political gains over long-term economic benefits, leading to misguided policies. In addition, some governments may lack the foresight to recognize the potential of new technologies or may act in response to pressure from special interest groups resistant to change.”

“When governments stifle innovation, what’s the best way to right those wrongs?”

GPT4 responded: “It is crucial to identify and remove barriers to innovation, such as excessive regulations and bureaucracy. Governments should establish policies that encourage research and development, invest in education and promote collaboration between the public and private sectors. Encouraging open dialogue, fostering competition and ensuring transparent and evidence-based decision-making can help create a more conducive environment for innovation.”

“Why do governments avoid short-term pain, even if it amplifies long-term costs?”

GPT4 responded: “Governments often prioritize the avoidance of short-term pain due to election cycles, political pressures and the need for public support. Short-term benefits can secure votes or address immediate crises, even in at the expense of long-term consequences. The complexity and uncertainty of long-term issues are a challenge for policymakers. Such short-termism can make it difficult to develop policies that serve the broader interests of society in the long term.”

“Why do individuals do the same thing?”

GPT4 responded: “Humans tend to avoid pain in the short term due to cognitive biases and psychological factors. The present bias, for example, makes immediate rewards and consequences seem more important than future ones. Furthermore, humans have difficulty accurately predicting long-term outcomes, leading to a focus on short-term gratification Uncertainty, fear of failure, and aversion to change also contribute to this preference for avoiding short-term discomfort term, even if it compromises long-term success.”

anecdote

“Why are we so often our own worst enemies?” I asked myself. I didn’t bother asking GPT4, couldn’t give me the real answer. We feed these great linguistic models everything we’ve learned, so they tell us what we already know. And that question remains as profound a mystery as any in the universe.

I started to appreciate it as a young trader. The profession requires making frequent decisions, many of which are incorrect. Both winning and losing trades can be shorted or left running. And the win/loss scorecard cannot be denied. In this pursuit, every decision must be made coldly, rationally, with the sole aim of maximizing profit while minimizing loss.

However, there are times when traders act differently. We trade out of fear, greed, arrogance, stubbornness, narcissism, boredom, addiction. We join in losing longs in the irrational belief that by buying more, we can reverse a declining market. Or vice versa. We swear if the market lets us get away with it last time, we’ll never do it again. Sometimes a Hail Mary trade can work, even spectacularly.

And so, from time to time, reckless behavior is rewarded. But of course, over time, the market catches up to those who can’t control their self-destructive impulses and ruins them. Those who survive this battle with themselves learn to make decisions that are harsh, humiliating, and exploit the behavioral weaknesses and lack of discipline in others. Naturally, these elemental flaws manifest in all aspects of who we are; personally, professionally, politically. They are the source of the world’s infinite complexity, our pain, also political dysfunction.

That’s why we should celebrate those rare dissenters with the courage to take a stand, forcing us to face our reflection when we succumb to our inner enemies. But these mysterious flaws are also the source of our sublime beauty. If we optimized for cold rationality, we would be completely boring algorithms. Maybe like the AIs we’re creating. Which I suspect we will never fully appreciate.

Source link