If there’s any large risk inherent in AI, or anything else that may threaten civilization, it’d already be prized into the market. Since the stock market is doing okay, we shouldn’t worry about AI risk so much.
This is how I read Tyler Cowen’s argument, made on multiple posts on his blog, Marginal Revolution (example).
There’s a flaw with this argument, when applied to threats that are so severe they could result in the end of the stock market itself. The threat from AI is severe enough that it qualifies. If I think there’s a chance that the world may end tomorrow, and that there’s little I can do about that, it may still be rational to invest. If the world doesn’t end, I’ll still profit from increasing stock prices, and if it doesn’t, I haven’t lost anything since my money won’t be worth anything either way. It’s related to the insight that gold is a bad investment to hedge against complete civilizational breakdown, since in such a situation it will not be worth anything either.
As a result, the stock market can only price in outcomes that aren’t bad enough to threaten the continued existence of the stock market itself.
Nehaveigur 