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Security, crime & defense

The Weaponization Objection: Why Public Welfare Scores Cannot Be Reliably Captured by Short-Sellers or Activists, and What That Means for Benchmark Design

STATUS · Manuscript in progressSSRN · Not yet posted
Open teaching deckSSRN — not yet postedPublication record
MECHANISM
Identify the incentive structure and the condition that would falsify the claim.
RULE CHANGE
Read the intervention only after the paper shows how the current payoff space fails to support system welfare.
READER USE
Use the summary to see where private gain creates system exposure, then check the study record.
Contribution — what this adds to the conversation
The paper contributes to the Postnieks canon by resolving the weaponization objection as a special case of the more general problem of adaptive gaming, extending the framework of Dynamic Manipulation and Standard Evolution (DMSE) to the activist-investor context. I conclude with design principles for βW implementation that render weaponization strategies unprofitable, and specify a falsification condition: if any jurisdiction implements βW under Decision Accounting and a short-seller successfully executes a weaponization strategy that yields abnormal returns exceeding 5% over a 90-day
WHAT'S NEW · The weaponization objection is valid under naive disclosure but not under Decision Accounting. Under Decision Accounting, fabricated signals are detected before affecting the score. Continuous publication eliminates the timing advantage for short-sellers. Complete counterfactual records create a forensic trail that deters manipulation.

The paper addresses the objection that public welfare scores (βW) could be manipulated by short-sellers for profit. It shows that under a naive disclosure regime, manipulation is possible, but under the Decision Accounting framework—with continuous publication, transparent construction, and ex ante verification—the weaponization strategy becomes unprofitable. The paper provides a formal model, four propositions, and a falsification condition.