Date: September 10, 2022
There’s a classic joke where two guys are walking down the street when one of them sees some money. “Look, there’s $20 on the ground!”, he says.
His friend, an economist, doesn’t even glance down before replying, “Can’t be. If there were really a $20 bill, someone would have picked it up already.”
This principle is known as the Efficient Market Hypothesis, and it states that there are no easy ways to make a lot of money, since otherwise someone would’ve exploited them by now. It will tell you that a “get rich from home” ad is probably a scam, but it can also smother innovation.
Imagine you’re talking with your friend when she pitches you a startup idea. Without sparing a thought, you reply “Nah. If that were really a good idea, someone would’ve thought of it by now.” And in this instance you’re probably right. But you’ve just given a fully general counterargument against ever starting a company!
Scott Alexander writes about Heuristics That Almost Always Work. For some classification problems, you can get to 99.9% accuracy with a heuristic that takes basically no effort. The problem is all the value of the classification lies in the 0.1%.
Of course in some cases the EMH is more applicable than others. If you see a dime on the sidewalk, you probably wouldn’t doubt its legitimacy, but if it’s a $100 bill in Grand Central Station, you can be pretty confident it’s a trick to get your attention. Consider factors like how many other people would be in a position to claim the prize, and how big the opportunity is.
So go ahead and enter that competition; start that startup; write that blog post. Someone has to be the one picking up the free money and it might as well be you.
But maybe you shouldn’t listen to my advice: after all, if this post were any good, someone would’ve written it already.
 This is why startup founders tend to be overconfident. Any reasonable person would’ve done the sensible thing and worked for Metabet.