Today's post, Buy Now Or Forever Hold Your Peace was originally published on 04 February 2008 . A summary (taken from the LW wiki):
If you really think that your reasoning is superior to that of prediction markets, there is free money available to you right now. If you aren't picking it up, you clearly don't really believe that you can beat the markets.
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My father used to be a stockbroker, and he says that people would always come in to him certain that a particular stock would fall or something. He would always say "Sure, if you really believe that, then this particular derivative will make you rich." And people never took him up on it.
To my knowledge, it's much harder to make money on knowing that a stock will fall than knowing it will rise. You have to find someone who's willing to let you shortsell it to them and all that.
Did they say rise half the time?
Which seems to be why Solvent's father - a stockbroker - pointed them in the direction of a particular derivative.
There are trading vehicles now that let you easily bet on either outcome, such as this one.
I think many intelligent people will start with a bias that they are smarter than the average of a market, but the idea of risking property maybe boosts our awareness of the uncertainties we have about our own knowledge.