This made my day. Somehow I’m reminded of the two economists who walk right past a fifty dollar bill on the sidewalk, noting that if it was real someone would have picked it up already.

Expand full comment

The upshot here is that so much of morality and ethics is driven by status quo bias. If something currently exists and is allowed, people will never dream of ending it based on some theoretical objection. If it’s not allowed, people will not see the benefits, think about every possible objection, and be so overwhelmed by how many there are that they’ll throw their hands up and say we can’t have this new thing. Some of the objections here, “rich people will benefit more” or “someone could rip off someone else,” can be made towards anything.

Expand full comment

I thought this was a followup to the cryptocurrency post until I got to the end. I guess there is a pretty strong pattern to the kind of objects people raise when they aren't informed enough to object coherently, but still want to sound like they are too smart to be duped.

Expand full comment

I do notice that, unlike prediction markets, there is in fact a thriving arbitrage market based on buying stuff at low prices in one store and selling them at high prices in other stores. These mispricings get corrected slowly, if at all. Unsure what implications this has, though of course physical goods and prediction market shares aren't really commensurate in many ways. It's probably easier to have perfect information in a market that deals in information, rather than goods.

Expand full comment

Not your intention, but I think this actually does highlight how fragile society is. Everything rests on most people not playing hardball with incentive structures.

You could’ve added, “the merchandise is just available for anyone to take, and it’s illegal for stores to physically hurt their customers. What’s stopping customers from waltzing in with a shopping cart, filling it up, and not paying?” And this would’ve been equally implausible until about 2 years ago.

Expand full comment

These "stores" sound like a really bad idea based on all of those objections.

Communism doesn't have stores, so it must be good.

Let's try communism.

Expand full comment

Is it weird that I see nash equilibria everywhere since reading Hidden Games? The answer to practically all those questions is “because it’s not a Nash equilibrium”

Expand full comment


Stores sell things for money, but we know that some groups have more money than others. Therefore, the existence of stores disproportionately benefits the already-privileged, widening inequality.

Expand full comment

Well Scott you get the killjoy award. Don’t you understand that it’s enjoyable to shower you with passive-aggressive , neurotic, nitpicking objections? Instead of being dismissive, how about budgeting 3 hours a day for the next month to reply to each and everyone kindly and in great detail.

PS I was crapping around with DALL-e and got it to make quite a nice Darwin-and-the-finch stained glass image. It’s here: https://photos.app.goo.gl/2XNbUJxh84hbFgYz5

Expand full comment

"If something would only work if it had regulation and a legal infrastructure, assume it will develop that regulation and legal infrastructure once it gets big enough and people are sufficiently sad about it not having it (people could resist, but that would suggest it’s not so obvious to stakeholders that it needs the infrastructure in order to succeed)"

This claim needs substantially more evidence than presented in this article. In fact the converse seems equally likely based on history that good things only become big after regulatory and legal infrastructure exists.

Expand full comment
Dec 21, 2022·edited Dec 21, 2022

I think maybe the moral of the story is that selling the benefits is more important than overcoming the objections. I understand how stores improve my life by helping me get access to all kinds of cool shit and thus am willing to take the risk of being sold an inferior product every now and then. But I don’t really see how the existence of polymarket or whatever has done anything for me so I can’t muster the enthusiasm to wave away the objections. (Maybe sort of in the same way I can’t really get terribly tied in knots of worry about AI risk because I only experience AI as beneficial — it helps me make art and drive my car and has never once turned a single family member into a paperclip.)

Expand full comment

I had thought this was about crypto until it was about prediction markets.

Expand full comment

I'm thinking that this is partly (1) the bar should be pretty high to overturn "try it and see" and (2) there's a crude and more reasonable form of most objections. The crude version is easier to make fun of.

Despite common behavior on social media, interesting objections don't have to be fatal flaws. They might be better thought of as adding some nuance. One wouldn't expect people to anticipate highways, suburbia, and smog as a side-effect of the invention of the automobile, but people will still try to anticipate second and third-order effects. (And probably get them wrong.)

We do know that some stores will try to "cheat" the unwary with misleading advertising, etc. Sometimes there are lawsuits. Often products are not as good as promised. We also know that shoplifting is sometimes a pervasive problem, and also that there are problem customers who take advantage of over-generous return policies.

Historically, the idea of self-service in grocery stores had to be invented. Before that, it was thought that the goods had to be kept behind the counter. See: https://en.wikipedia.org/wiki/Piggly_Wiggly

Self-checkout is a similar recent innovation.

Expand full comment

I think a steelman of a more reasonable store-objector is something like:

"Yes, stores will probably have real benefits, and I agree that we should try them out. But I think that even in a world with widespread stores, the practicalities will mean that customers often end up doing a fair bit of comparison shopping in order to get good prices, many people will have to drive farther to reach a smaller number of centralized stores, some people will miss the social connection of bazaars, shoplifting will be reasonably common, advertising on many products will be misleading, stores in places without repeat customers like airports will tend to have especially poor-quality wares, and many of the employees will have kind of crappy working conditions.

Claims that store introduction will lead to perfect price discovery and product distribution with maximum convenience forevermore seem importantly false to me because of these flaws, and these considerations should be accounted for when deciding how much to value store legalization over other policy interventions."

I think some people who complain about prediction markets are just doing the bad thing that this post accurately satirizes, but other people are more like the example above, mentioning a whole lot of things that are actually problems with stores in the real world (even if they're a big net gain over the previous bazaar environment) so that discussions can weigh the pros and cons accurately.

Expand full comment

This honestly reminds me a lot of self-driving car criticism as well.

"If self-driving cars try to avoid hitting people, couldn't you cause traffic accidents by running into the middle of a busy freeway and trying to get hit?"

Yes. In fact, you can do the same thing with human-driven cars today.

Please don't.

"If self-driving vehicles are used to deliver packages, couldn't you take a gun and shoot the vehicle and steal packages from it?"

Yes. Again, this is possible today as well, and I will reiterate, please do not do that.

"What if there was a self-driving taxi with a passenger? Could you stop the taxi by force, then kidnap the passenger and ransom them for money?"

Please see the previous two responses.

Expand full comment

>I’m having trouble explaining what I mean here.

I’m going to call this “trying too hard to find objections.” It is, perhaps, *actual* nitpicking; coming up with objections for the sake of coming up with objections.

In other words, the problem is that people are trying to find things that *sound* like they’d make good objections, without checking to see if they actually *believe* those objections. It’s a form of sophistry, which isn’t helpful, because every bad argument style is a form of sophistry.

Expand full comment

>But there’s an even deeper heuristic, something like “try it and see!” Don’t do this with communism

Oh God would someone please do it with communism.

I dream of having an actual economic experiment, which splits a country (or even a city) down the middle and makes one half communist and one half capitalist. “But haven’t we already done this? What are East and West Germany and North and South Korea other than exactly this?” Yes, but in each of these cases, it’s “not real communism.” So we agree beforehand on the terms, how the system will be set up, how decisions will be made, etc., so that it will be very difficult to say, “That wasn’t real communism/capitalism!” Everyone involved agrees that a winner will be declared after X time using Y metrics, and we can settle this damn debate once and for all.

Yes, yes, I know it won’t work. Communists *define* communism as a system that brings justice and prosperity (I’m not kidding or exaggerating). So any actual communism with a population larger than Dunbar’s Number will be declared “not real communism” once it fails. But, if done fairly and well, this experiment should convince any reasonable person of which system is superior.

Expand full comment

Hmmm, I don’t think I am sold on this whole “buying things from a store” idea. The case for prediction markets seems stronger and I think we should prioritize that over this whole “store” thing.

Expand full comment

Receipts don't actually use ink, they use thermal paper that changes color when heat is applied. The printer applies heat in the shape of glyphs to create the receipt.

Expand full comment

I think the reasoning behind 2. isn't exactly that the item varies in value depending on how much you want or need it, but that there isn't an easier way to get it than through stores (of some kind of another). Lack of access is what drives the profit (or rather, ease of access through stores) - less than "this product is worth much more to me than to the merchant because of x reason," it's "I can produce or procure this product on my own for $3,000 (if I can produce or procure it at all), but the store sells it to me for $15."

I'm not sure what this says about prediction markets; I find them boring.

Expand full comment

Honestly, IMO there is a top-tier SSC post in here, _if you take out point 10_. With that part included, it's just a response to people having stupid opinions about a specific topic. Without it, it's a grand work of philosophical comedy, making fun of people who have stupid opinions about all sorts of stuff! (See e.g. all the commenters who assumed it was about crypto.)

Expand full comment

Quote: “overall I expect these kinds of objections to be overcome by creating the thing, subjecting it to market pressure, and seeing what solutions people come up with.”

…This reminds me of the situation after “die Wende” (as the Germans call it) in Eastern Europe. Approx. 1994 we had some Czech political scientists visiting. They referred to the Cold Turkey-approach to introduce capitalism, and as a side note mentioned that they did not yet have proper bankruptcy legislation in place. I was horrified: “You cannot have capitalism without proper bankruptcy laws. You will be overrun by con artists and buccaneer capitalists”. They matter-of-factly responded that sure, that was highly likely, but you could not introduce laws before people felt the need for them. People needed to experience that first, and then such laws would probably be passed quite swiftly.

..and concerning the “don’t try communism”, here is Boris Yeltsin’s comment from back in the days, when he was asked his opinion about communism in Russia: “Communism was an important social experiment. It was well worth trying it out somewhere. The only sad thing is that it was tried out in such a big country”.

Expand full comment

You and the comments fail to address the main issue I see with buying things from stores, which is that it can't single-handedly save the economy. In a time of crushing inequality and sky-high property values, you want us to spend resources building your spherical-cow-economics castles for rich white people. It's insane to focus on growth when we have no stability.

Expand full comment

How about “people are fearful of change in general”

Expand full comment
Dec 21, 2022·edited Dec 21, 2022

I think this whole analogy is missing something essential: that a lot of these incentives are linked to the store existing in the physical world, and a lot of the schemes in the FAQ have a failure mode of "angry customers come back and threaten call the cops / break your windows". Defection has very high cost, so people are incentivized to cooperate.

When you get to a situation where people can disappear and never be found again and never have to be in contact with the people they're scamming (eg e-commerce), suddenly scams get a lot more frequent and reputation starts to matter a lot more. Anybody trying to run an online shop the way most regular shops are run (you can acquire whatever items you want, and you can leave at any time, but you're expected to pay before you leave, with only very loose mechanisms to enforce this) would go bankrupt immediately.

So I guess the moral is "trust basic decency only as long as the people you do transactions with are within face-punching range".

(But even then, don't trust it *too* much, because shoplifting is a thing in real life as well.)

Expand full comment

"Why think, when you can just do the experiment?"

- Cosma Shalizi's mother

Expand full comment

Rolling with your analogy, I don't mind what stores actually can do. But I object to the lazy libertarian argument that usually gets piled on top of the existence of stores, namely that anything worth having must eventually be available at a store, and therefore we can dismiss all non-store mechanisms of giving things to people, deciding which things to make, etc.

my objections to prediction markets are pretty much objections to the lazy beliefs that get piled on top of the actual market.

Expand full comment
Dec 21, 2022·edited Dec 21, 2022

>If you’re wondering why people aren’t going to get an advantage in the economy by committing horrible crimes, the answer is probably the same combination of laws, ethics, and reputational concerns that works everywhere else.

I do feel like something missing from your account is 'and a massive structure of regulations and social structures specifically built around making that one specific thing safe, both of which took decades/centuries to create.'

I have a lot of my money in the stock market, but if the stock market was 100% unregulated, I would not trust it there.

Lots of things *were* very dangerous before those structures were slowly built around them, even if still positive-utility to have, and I would expect any new thing to be much safer after 50 years of this process than when it is new. But the intuition that established institutions that have gone through this process are momentarily safer than new institutions that haven't, is I think correct.

Expand full comment
Dec 21, 2022·edited Dec 21, 2022

I've a feeling Substack may scold me for running too long in the comments again, so this is going to be in two parts:

(A) "But once you’re in the store you won’t be visible from the street, so couldn’t the storekeeper rob you and take all your money?"

They don't need to pull a gun on you, there is an entire branch of psychology devoted to "how do we get people to spend more and buy unnecessary goods when they're in-store?" Anyone who has ever gone into a shop intending to buy three items and walked out with a full basket of groceries or unintentional purchases has been a victim/successful subject of this. One of the simplest ways is to do things like change the layout of the store periodically. Customers get accustomed to the layout and go straight to the aisles for the goods they want. Change the layout, and they have to walk around the store to find where you put the tea-bags this time. And while they're walking around, managing the displays so that new items or 'special reduced bargain price' offers are visible means that people will tend to pick up items that they weren't intending to purchase beforehand. Even things like "steer customers to the right as they enter" and "have the smell of freshly-baked bread wafting into their faces the first thing as they come in the door" are all tricks of the trade.



(B) "If a storekeeper sells you something for $1, that means they expect to make a profit selling it to you at that price. Doesn’t that mean that you shouldn’t buy it, since it must be worth less than that?Doesn’t that mean that you shouldn’t buy it, since it must be worth less than that?"

(C) "What if a bad store used really good advertising to attract customers, and then other customers saw it was the store that all the other customers were going to, assumed it must be good, and went there themselves, forming a self-perpetuating cycle where everyone goes to a worse store and the system never self-corrects?"

(1) Below cost selling: "Selling below cost is a practice whereby a firm sells products at less than costs of manufacture or purchase in order to drive out competitors and/or to increase market share."

(2) Loss leaders: "Loss-leader selling is a marketing practice of selling a product or service at a loss in order to attract customers to buy other products at regular prices."

(3) 'Hello money' and 'pay to play' money: "a charge made by a retailer to a supplier for introducing the supplier's goods to its stores", "demanding payment from suppliers for promotions and shelf space and/or suppliers wishing to have their products featured prominently".

(4) Sales: sales are supposed to be of goods which are marked down in price due to necessity to move stock quickly. Consumer regulation requires that goods offered for sale be of equivalent quality to full-price goods. However, many stores order in special 'sale' goods which are cheaper, flimsier and of inferior quality, and these are put out alongside any genuine sale goods, if any. The customer believes they are getting a bargain because "it's a sale, the price is reduced" but in actuality the goods are of inferior quality and only worth the 'sale' price.

Stores will sell goods at prices below their true value in order to entice in custom. Once they have captured the market, then they increase their prices again. Large chain stores may use this tactic to force the shutdown of smaller competitors in an area, who cannot compete in price. Once the large chain store is the sole remaining outlet in an area, it will then hike up prices again, as now customers are captive to it (cannot access a cheaper store because of various inconveniences).

Various jurisdictions have enacted bans on below-cost selling, which comes in and out of favour. Same with 'hello money'. In brief: if you think you're getting a bargain, you may not be. Stores often sell goods not at their real cost; either they subsidise the reduced price in order to entice and hold on to customers, then hike the prices up, or the price is subsidised in other ways (e.g. suppliers paying to have their goods stocked in the store) or it really isn't worth the money you are paying, even at a 'reduced' price (fake sale goods).

(D) "It sounds like stores avoid shoplifting by checking for receipts. But receipts are just pieces of paper with writing on them. Couldn’t unscrupulous customers fake a receipt pretty easily?"

Scams around shoplifting are numerous and ingenious. Sometimes people will shoplift goods, then come back to the store and ask for a refund on the item. No receipt? That should be a problem, but often stores have a "the customer is always right" policy and instruct sales staff never to refuse or inconvenience a customer (because otherwise the customer will go on social media and badmouth the store) so the sales person, if the fake customer makes enough of a fuss, may just hand over the money without the receipt. And that's leaving out the blatant "I don't need a receipt, I'm just walking right out the door with this item and you can't stop me" shoplifting. Some tricks of the trade below:


"Switching tags. In many cases, shoplifters will switch a higher price tag with a lower one in order to pay the lesser of the two prices. To prevent this type of shoplifting, businesses are making a greater effort to label items more strategically."


Expand full comment

I am fan of prediction markets, and I am excited to see what they do in the future.

My biggest critique of the Prediction Market FAQ is that it relied too heavily on Econ 101, supply-and-demand equilibrium analysis. It was really more of a "Markets FAQ" than a "Prediction Markets FAQ". If someone "buys" that markets work in general, than the FAQ is convincing. If someone doesn't buy that markets work (which is apparently a really large amount of people?), then it fell flat.

What I would like to see is arguments that are more couched in the empirical evidence than the theoretical justifications. Personally, the reason that I am excited about prediction markets working in the future, is that *they already work right now*! Besides the obvious examples like Manifold markets which explicitely brand themselves as prediction markets, sports betting and the stock market are both very well-understood and well-analyzed. They provide the most compelling evidence for the potential of prediction markets--much more compelling than any theoretical analysis could be.

Expand full comment

11. The theory is that it's more profitable in the long run for stores to do legitimate business of exchanging money for goods than to rob or scam people, and so it's irrational for shopkeepers to do those things; but most times I've walked into a store, by the time I left I had no money left in my pockets and gained nothing of value to show for it. Why doesn't my experience match the theory?

Reputation takes time to build, and markets can stay irrational longer than you can stay solvent. Meanwhile, theory suggests there should be good stores out there, and indeed other people have better experiences. How are you selecting which stores to visit? Consider adjusting your criteria; or perhaps stores are simply not for you.

Expand full comment

This is why I'm pretty comfortable with prediction markets, but very uncomfortable with a lot of ideas involving implementing prediction markets for real-world decisionmaking on a societal level. Once you implement those, the rest of society can't opt out of decisions being made in that way, and if you get a regulatory capture situation where anyone twists the mechanism to their own purposes, then you have a situation where powerful people have a major stake in seeing that the situation persists.

Expand full comment

Question number 2, rephrased: "I don't understand the concept of declining marginal utility."

Expand full comment

If a storekeeper sells you something for $1, that means they expect to make a profit selling it to you at that price. Doesn’t that mean that you shouldn’t buy it, since it must be worth less than that?

Fwiw, part of the profit embedded in that $1 price is that the product is there on the shelf, the store exists and has lights on so you can see it, and employees to help you find it/buy it. That service isn't worthless to you. So sure, it might only be "worth" 50 cents but if you're going to begrudge the purveyor of the profit, then good luck finding that 50 cent thing to buy. And just because there are folks out there that practice price gouging doesn't change that the service part of pricing has value to the consumer too.

Expand full comment

Scott you promised you'd be nicer to communists but the rhetoric has since, if anything, gotten worse. I'm trying at every opportunity to get leftists interested in rat adjacent ideas, sometimes that means defending you personally, this really makes it hard. At least say "authoritarian communism", "soviet style communism", something, throw us a bone!

Expand full comment

While reading this my guess was it's about housing policy.

Expand full comment
Dec 22, 2022·edited Dec 22, 2022

One advantage of stores is that in a bazaar, if you are caught stealing the guards will attack you on sight. (1)

Stores, on the other hand, will post your security camera photo by the door if you are caught stealing.

1. Ultima 2, Rise of the Enchantress, 1982

Expand full comment

It's pretty hard to steal right now IRL in person. It's pretty easy online. I don't do it but a bunch of people have tried to scam me, especially the poor Nigerians. The average Nigerian makes $2 USD a day, but they can make $60K USD from scamming, so I fucking hate it, but I get it. My poor mom got romance scammed by a Nigerian for $30K USD about 5 years ago so I wanted to go after them (well, the ONE) but he's a fucking Igbo warlord and I live in my mom's basement, basically, so he's got me outresourced ATM LOL I speak some Yoruba but can't get the hang of Igbo, GDI


Expand full comment

I didn't read the article on prediction markets. Right as you were getting to lampshading the joke, I was debating whether to drop a comment asking if you'd been getting into edibles and posting while striding through whatever galaxies you were visiting at the time.

Expand full comment

Can I show this to other people?

Expand full comment

What I found missing here is that in order for (1) and (3) to work for whatever a "store" (quotes omitted from here on) actually is, this means:

- a storekeeper must give up their anonymity in order to operate a store, otherwise law enforcement cannot punish the storekeeper (they can, however, shut down the store, but see the next point)

- setting up a store must have non-zero cost associated with it, otherwise escaping a bad reputation becomes too easy (who bothers cross-referencing the name of a storekeeper with the owners of other stores that were shut down by the police/government in the past?)

Both trivially apply to stores, but they don't trivially apply to conceivable store equivalents; neither in a technical nor moral (as in: people have demanded that either point must not apply in $context) sense. Especially the second point is often seen as an anti-pattern, and I would tend to generally agree - as much as I like solving problems by putting a (fair) price tag on things, proposals in the spirit of charging for emails to combat spam are generally extraordinarily stupid.

Expand full comment

Part of the incessant nitpicking I think is just pure status quo bias - the west had become a vetocracy. As a result, the only things that actually can be built are ones that either use power to bypass the veto points or build on virgin terrain where no vested interests have yet accreted to oppose everything. Lots of institutions exist now that we would never allow to be created if they were put up for a vote.

Expand full comment

I was involved in the criminal prosecution of a liquor store owner who hired someone to burn down the liquor store across the street.

The hired mook and his friend tried four times, did some damage, but never managed to actually burn down the rival store. The cops caught the mook, who ratted out the owner.

Expand full comment

> If you’re wondering why people aren’t going to get an advantage in the economy by committing horrible crimes, the answer is probably the same combination of laws, ethics, and reputational concerns that works everywhere else. It’s possible to create systems where these safeguards fail, but you have to try pretty hard.

> If something would only work if it had regulation and a legal infrastructure, assume it will develop that regulation and legal infrastructure once it gets big enough and people are sufficiently sad about it not having it (people could resist, but that would suggest it’s not so obvious to stakeholders that it needs the infrastructure in order to succeed)

The problem is when advocates also demand that existing regulations be dismantled in order to let their project go through (prediction markets and *especially* crypto.)

Expand full comment