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[Linkpost] “Self-Resolving Prediction Markets” by PeterMcCluskey
This is a linkpost for https://bayesianinvestor.com/blog/index.php/2024/03/02/self-resolving-prediction-markets/
Back in 2008, I criticized the book
Predictocracy
for proposing prediction markets whose contracts would be resolved
without reference to ground truth.
Recently, Srinivasan, Karger, and Chen (SKC) published more scholarly
paper titled Self-Resolving
Prediction Markets for Unverifiable Outcomes.
Manipulation
In the naive version of self-resolving markets that I think
Predictocracy intended, the market price at some point is used to pay
off participants. That means a manipulator can enter the market as a
trader, and trade so as to drive the market price in whatever direction
they want. Unlike markets that are resolved by a ground truth, there's
no reliable reward for other traders to offset this distortion. It seems
likely that manipulators will sometimes be able to set the price
wherever they want, because there are no incentives that offset the
manipulation.
SKC replace the standard prediction market [...]
---
Outline:
(00:27) Manipulation
(02:14) When is this useful?
(04:11) AI Risks
(05:16) Conclusion
---
First published:
March 3rd, 2024
Source:
https://www.lesswrong.com/posts/tJmpsEevCcEfL6a7Z/self-resolving-prediction-markets
Linkpost URL:
https://bayesianinvestor.com/blog/index.php/2024/03/02/self-resolving-prediction-markets/
---
Narrated by TYPE III AUDIO.
View all episodes
By LessWrongThis is a linkpost for https://bayesianinvestor.com/blog/index.php/2024/03/02/self-resolving-prediction-markets/
Back in 2008, I criticized the book
Predictocracy
for proposing prediction markets whose contracts would be resolved
without reference to ground truth.
Recently, Srinivasan, Karger, and Chen (SKC) published more scholarly
paper titled Self-Resolving
Prediction Markets for Unverifiable Outcomes.
Manipulation
In the naive version of self-resolving markets that I think
Predictocracy intended, the market price at some point is used to pay
off participants. That means a manipulator can enter the market as a
trader, and trade so as to drive the market price in whatever direction
they want. Unlike markets that are resolved by a ground truth, there's
no reliable reward for other traders to offset this distortion. It seems
likely that manipulators will sometimes be able to set the price
wherever they want, because there are no incentives that offset the
manipulation.
SKC replace the standard prediction market [...]
---
Outline:
(00:27) Manipulation
(02:14) When is this useful?
(04:11) AI Risks
(05:16) Conclusion
---
First published:
March 3rd, 2024
Source:
https://www.lesswrong.com/posts/tJmpsEevCcEfL6a7Z/self-resolving-prediction-markets
Linkpost URL:
https://bayesianinvestor.com/blog/index.php/2024/03/02/self-resolving-prediction-markets/
---
Narrated by TYPE III AUDIO.
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