# 📖 **Summary of Inadequate Equilibria by Eliezer Yudkowsky** *Summary based on Scott Alexander's Slate Star Codex review (December 1, 2017)* ## 📇 **At a Glimpse** > [!Summary] _Inadequate Equilibria_ explores why systems sometimes fail to improve, even when opportunities exist for clear benefits. Yudkowsky identifies three core reasons why systems stay broken: misaligned incentives, information gaps, and bad Nash equilibria. The book also questions when to trust expert consensus vs. personal reasoning, especially in complex, competitive fields. --- ## 🧠 **Core Concepts** 1. **Misaligned Incentives** - Sometimes, decision-makers don’t benefit from making improvements or may even lose out if they try to help others. These **perverse incentives** maintain broken systems. - _Example_: Central bankers in Japan kept a low money supply despite the obvious benefits of increasing it because the reputational risk was too high. 2. **Information Gaps** - Decision-makers may not have access to the necessary information, even though it exists elsewhere. This leads to inefficiencies and missed opportunities. - _Example_: FDA-approved nutrient formulas for infant care continue to use harmful lipids, despite clear knowledge of better alternatives. 3. **Bad Nash Equilibria** - When multiple players are involved, systems can remain stuck in suboptimal states because no individual actor has enough power to improve things on their own. - _Example_: **Facebook**’s dominance persists because users won’t leave unless all their friends do, even if everyone dislikes the platform. --- ## 🔄 **Analogies** 1. **$20 Bill on the Sidewalk** - If you see a $20 bill lying on a busy sidewalk (e.g., Grand Central Station) and no one has picked it up, you should question its reality. This is an analogy for situations where obvious, lucrative opportunities are ignored by large institutions, which suggests deeper, systemic reasons behind this oversight. - _Example_: If healthcare inefficiencies were easily solvable, an entrepreneur would have fixed it by now—so why haven’t they? 2. **The Broken Car Market (Lemons Problem)** - Even when sellers of good cars are honest, buyers assume they might be "lemons" because there’s no way to verify their quality. This drives honest sellers out of the market, worsening the problem. --- ## 📘 **In-Depth Summary: The Three Ways Evil Enters the World** 1. **No Incentives for Correction** - Errors persist when there's no reward for fixing them. If people can't personally benefit from correcting mistakes, they often won't. - _Example_: Housing bubbles remain uncorrected because there's no way to short the housing market. 2. **Information Bottlenecks** - Even when some people know the right answer, it may not reach those who need it most. The **lemons problem** explains why knowledge often doesn't trickle down to decision-makers or beneficiaries. - _Example_: Central-line infections, killing thousands, could be reduced by simple hand-washing practices, yet implementation was slow. 3. **Bad Nash Equilibria** - Systems can remain broken because no individual actor can single-handedly improve them. Solutions require collective action, which is often too difficult to organize. - _Example_: Facebook persists despite dissatisfaction because users won’t leave without mass coordination. --- ## 💬 **Key Quotes for Emphasis** > "The first way evil enters the world is when there is no way for people who notice a mistake to benefit from correcting it." > "The second way evil enters the world is when expert knowledge can’t trickle down to the ordinary people who would be the beneficiaries of correct decision-making." > "The third way evil enters the world is through bad Nash equilibria." --- ## 🔗 **Related Concepts and Backlinks** - [[Nash Equilibria]] - [[Efficient Market Hypothesis]] - [[Information Asymmetry]] - [[Lemons Problem]] - [[Collective Action Problem]] --- ## ❓ **Open Questions/Further Thoughts** - How can we design systems that align personal incentives with collective good? - What mechanisms could help bridge information gaps and ensure that critical knowledge reaches the right decision-makers? - Could blockchain or other decentralized technologies help overcome bad Nash equilibria by enabling better coordination among individual actors? ---