failure family
information asymmetry
- limited-protection-scope: Contingent capital offers only limited protection against information asymmetries, principal and agent conflicts, and collective action problems, so i
- public rulemaker information deficit: Public rulemakers rely on stable and presumptively optimal rules because they lack necessary, comparable, decentralized, and institution-specific info
- diligence impossible where manager blocks access: Because Madoff overtly disallowed scrutiny of his secretive and unconventional practices, it was impossible for feeder funds such as Rye to perform th
- Analyst opacity: The complexity of unconstrained mutual fund trading has grown to the point that even leading professional analysts struggle to assess these funds' por
- Go anywhere opacity: The go anywhere features of unconstrained mutual funds impede a retail investor's ability to ascertain and understand what the fund is invested in and
- Contested track record problem for new managers: New managers increasingly face contested track records, meaning the new firm cannot get a consensus from the manager's old employer about the manager'
- Early liquidity without information: ICOs provide the highest possible liquidity for investors at the very beginning of a platform's lifecycle, before the reporting, accounting, and legal
- regulator consumer preference gap: There is a systematic disconnect between the facts regulators identify as important and the actual experience and wishes of most consumers.
- good news only culture: Centralized, hierarchical environments do not value honesty and reward good news only, so nobody wants to carry bad news upward, and problems are ther
- limited-trust-assurance: Trust between counterparties in decentralized systems can only limitedly be assured by smart contracts, because the contract cannot verify the underly
- unresolved-information-asymmetry: Smart contracts leave counterparty information asymmetries unresolved: the tenant of a smart property cannot fully know whether the landlord is provid
- policy-opacity-blocks-anticipation: Monetary policy making for fiat currencies largely lacks transparency, and that opacity prevents markets from taking anticipatory action on policy ind
- speculator-informational-advantage: Extreme illiquidity combined with the herd mentality of crypto investors systematically benefits speculators, because it lets apparent scarcity materi
- asymmetric trading information on DEX: Decentralized exchanges may fail to ensure market integrity, because the code that creates a DEX can allow asymmetric distribution of trading informat
- opaque cartel pricing: Because the existing code review market provides no publicly transparent pricing, it arguably harms the public for the benefit of the cartel and its c
- Blindness to information at the edge: Because information at the edge does not travel up a centralized hierarchy, the central authority makes decisions without full information, and a cent
- Underwriter Screening Free Ride And Lemons Problem: In traditional underwriting, investors who cannot distinguish underwriters by reputation create free riding: once free riding occurs, underwriters sto
- Startup self censorship: Information asymmetries increase in traditional VC investment rounds because startups are incentivized to self censor when engaging with VCs, having l
- cross exchange information asymmetry: Arbitrage trading emerges in crypto markets because of information asymmetries across exchanges, which arise from imperfect disclosure, and the result
- Deliberate Price Opacity: The existing code review market does not provide publicly transparent pricing, and that opacity is deliberate because neither client nor code reviewer
- Opacity Enables Insider Deals: Price discovery is a public service function because without public pricing consumers cannot realistically select the service provider offering the hi
- Price opacity: The existing code review market provides no publicly transparent pricing of review services, and that opacity arguably harms the public for the benefi
- Network Bound Deal Selection: Without a full view of the impact market, Impact 1.0 donors end up funding projects run by people already in their existing networks rather than the m
- obsolescence of asymmetric information remedies: Hidden action, that is moral hazard, and hidden information, that is adverse selection, are not merely reduced in the agentic economy but rendered com
- coder controlled ambiguity: When an encoded legal status or act is disputed, the code is read against the party who selected the programme or determined the manner of coding, bec
- Generative-Quality Failure: Without a verification record accessible to counterparties, generative markets suffer a generative-quality failure analogous to the lemons problem: co
- Verification Capability Asymmetry: If probabilistic AI agents cannot reliably distinguish truth from fabrication, the lemons problem and signaling games retain relevance, but the asymme