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Agreed—pampelmousse is without a doubt the best LaCroix flavor.

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“ Markets are knowledge ecosystems… and the price system is the nervous system of that ecosystem.”

That is a profound statement that should be taught in every school. It gets right to the heart of the matter and is very memorable.

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Thank you!

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Jul 6, 2023Liked by Lynne Kiesling

Fantastic piece Lynne. Markets are an information ecosystem. Going to read this a couple more times.

Some of these dynamics are illustrated by LLM degradation research. Rather than improving, devolve incoherently when fed LLM output. Superficially the problem is computational, but actually cognitive process, implicit behavior, and situationally contextual. The knowledge ecosystem is deeply embedded in culture, imprinted in neural networks, and genetics; perhaps even inaccessible today.

This has strong implications for tech driven market systems and the limits of AI feasibility today.

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I love these posts, they make some very deep economic questions accessible to engineers like myself! I found this blog because of my interest in energy, and this knowledge problem is a fascinating one in that context too. The LaCroix analogy (which we don't get in Australia, but it featured in an episode of Succession recently) sound to me like asking consumers to put a value of using electricity. There's some much context and individual knowledge wrapped up in that question that we typically gloss over so we can estimate a $/kWh amount and just treat that as a fixed assumption going forward.

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Every day I find another great substack like this one. Which is awesome, but it's getting hard to keep up :)

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This is fantastic stuff. Can you provide the full reference for your 2015 book/article?

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Thanks! There's a link to it in the post, but here's the official citation:

Kiesling, Lynne. 2015. “Knowledge Problem,” in Peter Boettke and Christopher Coyne, eds., Oxford Handbook of Austrian Economics, Oxford, UK: Oxford University Press.

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Sorry, must have missed the link. The idea of the knowledge problem as you set out is also part of work by ISAIAH Berlin, LW of course, and if seen in a particular light many of the early post-structuralists dealing with language and meaning. The opposition you set out goes far back in my mind to the battle between the Platonists and the Sophists/rhetoricians. The clarity of the writing is to be admired.

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