Common Knowledge or Fortune?
December 14, 2018·6 comments·In Brief
A painting with forensic evidence, ownership records, and expert validation was deemed worthless by a single institution. Another painting with almost no documentation became valuable through the same institution's approval. The difference wasn't the quality of evidence. It was who had the power to determine what everyone agreed was true.
• Two paintings, opposite fates. One Renoir had infrared analysis of canvas manufacturers, paint composition matching, gallery records spanning decades. Another work, a Montemezzano, had a fraction of that documentation. Yet institutional validation flipped their market values in opposite directions, suggesting evidence alone doesn't determine price.
• The gatekeeper decides the narrative. The Wildenstein Institute controls the authenticated catalogues that auction houses require. Without their certification, even overwhelming analysis means nothing. With it, minimal evidence becomes sufficient. The same expert authority operates under different standards depending on which painting it's judging.
• Markets don't price facts. They price consensus. What matters isn't what the evidence shows. What matters is which credentialed voice people have agreed to trust. That agreement can persist even when the evidence contradicts it, and collapse even when evidence supports it.
• This pattern extends beyond art. The authentication problem in paintings mirrors how prices get established across financial markets, where institutional validators shape what counts as real. If you're not accounting for who controls the narrative, you're missing how actual valuations happen.
• The question becomes unavoidable. If credentialing power can override evidence this completely in markets where facts seem objective, what happens in markets where facts are already contested or interpreted?
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This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.
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Comments
That’s an awful lot of power that this Wildenstein Institute wields.
What’s the trivia game called? Looks fun!
That stats table looks like LearnedLeague. Lot’s of fun but a bit time consuming (and don’t shirk your responsibilities to participate or you’ll be kicked out tout de suite!)
Yes, it is Learned League, and Enoch is right. More than a couple daily forfeits and you’re gone. The reason Ben and I have a different number of questions answered is that I have forfeited once (this season, just spaced out), and he has never forfeited!
The lessons are pretty clear is very prescient…I am reminded of the years I spent in what most call mission critical teams and developing a situational awareness that curates a mindset of changing conditions in getting to a desired outcome. Some thoughts…
Internet…Furthermore, whereas the original system was non-hierarchical, decentralized and required active users, a handful of companies now operate as gatekeepers and they funnel content through algorithms to users who are being pushed into passivity. Whereas before users would click-by-click navigate the open internet, users are now placed behind ‘walled gardens’ where they scroll through reams of content curated for them by proprietary algorithms.
O.O.D.A.
Observe/Orient/Decide/Act
Key Insights: Feedback Loops/Decision Making/Tempo
Operations do not take place in a vacuum…they are shaped by external dynamics/agents from policy makers, media, and leadership. Navigating this environment is complex in pushing forward to productive/effective outcomes.
“Our true nature, said Proust, is outside of time, and involuntary memory is the gateway to redemption.”
Complex, and because so many of these walled gardens are so without our knowledge (as you point out), sometimes impossible.
Came across this in my morning reads…if I am blabbing too much, someone tell to just shut-up, but thought it would add to the flavor of this conversation…
Ref: Anders Sandberg, Gwern
As the world gets bigger it gets weirder. In big worlds reporting on noteworthy extreme events becomes useless at informing us about the world.
This is an interesting one because it illustrates a version of Littlewood’s Law“ of Miracles”: in a world with ~8 billion people, one which is increasingly networked and mobile and wealthy at that, a one-in-billion event will happen 8 times a month.
This is life in a big world, and it’s only getting bigger as the global population grows, wealth & leisure grow, and technologies advance. (If you thought humans could think & do weird things and fail in weird ways, just wait until everyone gets their hands on good AI tech!) There are billions of people out there, and anything that can go weird, will.
Weirdness increasingly tells us nothing about the world at large. If you lived in a small village of 100 people and you heard a few anecdotes about bad behavior, the extremes are not that extreme, and you can learn from them (they may even give a good idea of what humans in general are like); if you live in a village of 10 billion people, you learn… nothing, really, because those few extreme anecdotes represent extraordinary flukes which are the confluence of countless individual flukes, which will never happen again in precisely that way.
More immediately, you should keep your eye on the ball: don’t rely on self-selected convenience samples of news/opinions/responses/anecdotes brought to you by other people, but make your own convenience sample which will at least have different biases and be less extreme (ie don’t go off 10 comments online, ask 10 of your followers instead, or read 10 random stories instead of the top 10 trending stories); insist on following back sources (if you don’t have time to trace something back to its source, then you don’t have the right to share it to other people & use up their time); discount things which are “too good to be true”; focus on immediate utility; try to reduce reliance on anecdotes & stories; consider epistemological analogues of robust statistics like simply throwing out the top and bottom percentiles of data; especially try to ignore recent news; and ///pay attention to the trends, the big picture, the central tendency, not outliers.///
The world is only getting bigger.
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