Title: Theory / Unimportant / Human / Economics / Indaquate Equilibria

Question: Main question of this book.
Answer: “When should I think that I may be able to do something unusually well?”
Page: 1

Name: Inadequacy analysis
Definition: Predict what kinds of efficiency we should expect to exist in realms beyond the marketplace, and what we can deduce from simple observations
Page: https://equilibriabook.com/inadequacy-and-modesty/
Section: ii

Name: Message of modesty
Definition: “You can’t expect to be able to do X that isn’t usually done, since you could just be deluding yourself into thinking you’re better than other people.”
Page: https://equilibriabook.com/inadequacy-and-modesty/
Section: ii

Name: Modest epistemology
Definition: What if it’s you, and not the professional making these decisions, who have failed to grasp the relevant considerations?
Page: 4
Chapter: 1
Section: ii

Question: How to open any explanation of the Efficient Market Hypothesis ?
Answer: Two economists are walking along the street, and one says, “Hey, someone dropped a $20 bill!” and the other says, “Well, it can’t be a real $20 bill because someone would have picked it up already.”
Page: 7
Chapter: 1
Section: ii

Name: Efficient market
Definition: A market that makes prediction which are not worse than yours.
Page: 7
Chapter: 1
Section: ii

Name: short-sell
Definition: borrow the asset, sell it, and then buy it back later after the price
declines
Page: 22
Chapter: 2
Section: ii
Definition2: create a synthetic copy of an asset, so you can sell that
Intuition: Bet that the price will decline

Question: Why would someone short an asset ?
Answer: It allows you to make money if the price goes down in the future
Page: https://equilibriabook.com/an-equilibrium-of-no-free-energy/
Answer2: has the effect of lowering the asset’s price by increasing supply.
Index: 5

Name: An exploitable market
Definition: A market whose potential inefficiency can be turned into money.
Page: 21
Chapter: 2
Section: ii

Question: why you might do very well to think for yourself about whether the price seems sensible to you before buying a house ?
Answer: You might know better than the market price, even as a non-specialist relying only on publicly available information.
Page: https://equilibriabook.com/an-equilibrium-of-no-free-energy/
Section: ii

Name: Volatility
Definition: The fact that a value may change quickly unpredictably.
Page: https://equilibriabook.com/an-equilibrium-of-no-free-energy/
Section: ii

Smaller0: \(m\) is exploitable
Greater0: \(m\) makes correct prediction
Page: https://equilibriabook.com/an-equilibrium-of-no-free-energy/
Section: iii
Variables: \(M\) a market

Smaller0: \(M\) can't be short
Greater0: \(M\)'s element can be overpriced
Page: 23,
Chapter: 2
Section: ii, iii
Variables: \(M\) a market

Question: Why, when elements can't be short, they can be overpriced, but not underpriced ?
Answer: You can profit of an underpriced element by buying it. You can't sell something that you can't short.
Page: https://equilibriabook.com/an-equilibrium-of-no-free-energy/
Section: iii
Variables: \(M\) a market

Name: Adequacy to do x
Definition: The fact that, if x is possible, society does it.
Page: 30
Chapter: 2
Section: iv

Smaller0: inadequacy
Greater0: exploitability
Page: 30
Chapter: 2
Section: iv
Smaller to greater: is more important than
Greater to smaller: is less important than

Name: Chesterton's fence
Definition: It is good practice, before stopping to do something to understand why it was done. There may be good but non obvious reason and stopping doing it, deleting it, as otherwise you may face unexpected consequences
Page: 15
Chapter: 1
Section: iv
Etymology: Chesterton wrote an article using a fence as an example

Name: Chesterton's absence of a fence
Definition: If something is obviously a good idea and is not done, there should be a reason why it actually can't work and people who tried failed
Page: 15
Chapter: 1
Section: iv
Etymology: Reverse of Chesterton fence

Question: Causes of inadequacy
Answer: Decisionmakers who are not beneficiaries
Page: 41
Chapter: 3
Answer2: asymmetric information
Answer3: Nash equilibria that aren’t even the best Nash equilibrium, let alone
Pareto-optimal.

Question: What is the primary benefit of inadequacy analysis
Answer: stopping trusting that things are optimal so you can't do better
Page: 97
Chapter: 4
Section: i
Answer2: check if there is a cause for inadequacy before trying to do better than something optimized for already

Question: What is the easiest way to find an inadequacy
Answer: Listening to contrarian who you have reason to trust and who explain this inadequacy at object-level
Page: 107
Chapter: 4
Section: i

Name: reference class tennis
Definition: A discussion about a topic between people disagreeing what is the correct outside view to apply to the topic
Page: 125
Chapter: 5
Section: iv