CAPTCHA Arbitrage

"In an attempt to learn where the solvers live, Savage et al. sent out specially fabricated CAPTCHAs with images of words in various languages. [..] But one organization showed exceptional linguistic versatility, even solving challenges in Klingon."<p>This is a rather surprising finding.

<p><pre><code> This last caveat leads to an interesting economic question. As noted above, retail prices for CAPTCHA- solving vary over a wide range, from about $1 per thousand to $20 per thousand. This price spread, and the fact that it’s technically feasible to route a CAPTCHA through the system more than once, suggests a major arbitrage opportunity. We can set up a high-price CAPTCHA service and farm out all the actual work to low-price competitors. In a free economy—and what economy could be freer of regulation than a criminal one?—that situation is not supposed to endure. </code></pre> Well, at least until they add CAPTCHAs.

"This last caveat leads to an interesting economic question. As noted above, retail prices for CAPTCHA-solving vary over a wide range, from about $1 per thousand to $20 per thousand. This price spread, and the fact that it’s technically feasible to route a CAPTCHA through the system more than once, suggests a major arbitrage opportunity. We can set up a high-price CAPTCHA service and farm out all the actual work to low-price competitors. In a free economy—and what economy could be freer of regulation than a criminal one?—that situation is not supposed to endure."<p>Finack's comment on the original post was worth noting here: Arbitrage has far more to do with information transparency than the free-ness of the economy, as such arbitrage is pretty common in criminal economies where prices aren't public information.

I went to a speech by savage earlier this fall. The point that I took away from it is that what captchas do is filter out the bad guys who haven't figured out a business model.<p>On the klingon point: They theorized that the particular organization was a bunch of PHDs rather than farmed labor - and that it had learned from previous 'example answers' they had submitted. That particular organization, it was noted, was also an order of magnitude more expensive than the others.