>For several decades, we have known that the answer is yes. In recent work, Rafael Guthmann and I show that informational efficiency can extend to big platforms coordinating buyers and sellers—what we call market-makers.
>The bigger problem with Acemoglu’s suggestion that computational abilities can solve Hayek’s challenge is that Hayek wasn’t merely thinking about computation and communication of information. Instead, Hayek was concerned about our ability to even articulate our desires. In the example above, the buyers know exactly how much they are willing to pay and sellers know exactly how much they are willing to sell for. But in the real world, people have tacit knowledge that they cannot communicate to third parties. This is especially true when we think about a dynamic world of innovation. How do you communicate to a central planner a new product?
>The real issue is the market dynamics require entrepreneurs who are imagining new futures with new products like the iPhone. Major innovations will never be able to be articulated and communicated to a central planner. All of these readings of Hayek and the market’s ability to communicate information—from formal informational efficiency to tacit knowledge—are independent of computational capabilities
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>For several decades, we have known that the answer is yes. In recent work, Rafael Guthmann and I show that informational efficiency can extend to big platforms coordinating buyers and sellers—what we call market-makers.
>The bigger problem with Acemoglu’s suggestion that computational abilities can solve Hayek’s challenge is that Hayek wasn’t merely thinking about computation and communication of information. Instead, Hayek was concerned about our ability to even articulate our desires. In the example above, the buyers know exactly how much they are willing to pay and sellers know exactly how much they are willing to sell for. But in the real world, people have tacit knowledge that they cannot communicate to third parties. This is especially true when we think about a dynamic world of innovation. How do you communicate to a central planner a new product?
>The real issue is the market dynamics require entrepreneurs who are imagining new futures with new products like the iPhone. Major innovations will never be able to be articulated and communicated to a central planner. All of these readings of Hayek and the market’s ability to communicate information—from formal informational efficiency to tacit knowledge—are independent of computational capabilities
!ping ECON