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Is optimization an illusion in practice?

Optimization in an environment where unquantifiable uncertainty is greater than risk is usually presented as “free” - no cost other than its implementation is calculated/factored in.

But optimization is only possible based on a (quantitative or cognitive) model - which inherently ignores unquantifiable uncertainty. The way we ended up with “Just in time” production may have contributed to the massive disruption COVID has caused in the global supply chains.

Optimiziation is ultimately a way to reduce redundancy, and as Taleb would say: “suppress volatility”. But it does come with the “externality” of larger, unquantifiable or, unimaginable shocks, so in practice, it’s a trade-off.

Example from adaptive markets…

mayhe homo economicus optimizied their expexted utility to the point of that a not-so-tail event that wiped them out

maybe the reason why we don't encounter homo economicus in real life