In industry, there is blunt-force algorithmic tension – ‘Efficiency, capitalism, commerce!’ versus ‘Robots are stealing our jobs!’ But for algorithmic art, the tension is subtler. Only 4 per cent of the work done in the United States economy requires ‘creativity at a median human level’, according to the consulting firm McKinsey and Company. So for computer art – which tries explicitly to zoom into this small piece of that vocational pie – it’s a question not of efficiency or equity, but of trust. Art requires emotional and phrenic investments, with the promised return of a shared slice of the human experience. When we view computer art, the pestering, creepy worry is: who’s on the other end of the line? Is it human? We might, then, worry that it’s not art at all.
Bill Fulkerson on 05 Oct 20We study the classical problem of raising capital under asymmetric information. Following Myers and Majluf, we consider firms endowed with assets in place and riskier growth opportunities. When asymmetric information is concentrated on assets in place (rather than growth opportunities), equity-like securities are more likely to be optimal. In contrast, when asymmetric information falls on growth options, debt is optimal. Intuitively, this happens because when the asset with greater volatility is less affected by asymmetric information, issuing a security with greater exposure to upside potential (such as equity) can be less dilutive than issuing a security lacking such exposure (such as debt). Our results suggest that equity is more likely to dominate debt for younger firms with larger investment needs, endowed with riskier, more valuable growth opportunities. Thus, our model can explain why high-growth firms may prefer equity over debt, and then switch to debt financing as they mature.
