Simulation is taking over AI: 10% worse, 100x cheaper, 10000x faster

Latent Space argues that each year since 2022, one more component of the AI pipeline has flipped from human-made to model-made, calling it 'increasingly ambitious human simulation.' The trend started with reward signals (InstructGPT, RLAIF) and training data (Microsoft's Phi series), with synthetic versions becoming load-bearing at frontier labs.