WQ Blog

Noah Healy: “I have a system for rebuilding the market place pretty much from first principles, using computer technology to allow better price signaling effectively, existing markets are basically about and sell, and while there’s a little bit of information about future desired strike prices and so on, at the core, people who are buying, think prices should be higher or will go higher, and people that are selling things that… Prices will go lower. So in information terms, there’s sort of a maximum of one bit of information in that signal, and since people aren’t perfect and they make mistakes, there’s actually less than one bit in that signal, and so since the actual information about the economy is in fact a very rich signal that has an enormous amount of information in it that’s being constructed out of these sub one-bit pieces, there’s essentially an enormous amount of processing that has to go on with the existing model, and that processing that’s effectively just noise. It would be like if you had an engine that you didn’t oil and it overheated and was just sitting there. Basically, that’s what’s going on right now.”