Limits of Current US Prediction Markets (PredictIt Case Study)

Two replies here, I think:

First, are any of the things you suggest in fact legal for US-based bettors?

Second, how difficult in terms of time/inconvenience/up-front capital costs without the potential for leverage are they compared to the ways in which you can bet on e.g. the price of Google stock?

If you're telling someone in the US "you should be willing to bet your views on prediction markets, if you're right it's free money" when what you mean is "it's free money provided you're willing to dedicate hours to working your money through crypto exchanges, committing tax fraud along the way", that feels somewhat different.

I would be willing to tell someone who thinks Google shares are underpriced "go buy some then," because buying Google stock at low cost is legal, very easy, and even if you have limited up-front cash the real financial markets offer opportunities for leverage (options etc.)

I would not be willing to tell someone who thinks Trump Wins shares are underpriced "go buy some then" when that process is time-consuming, difficult, and likely illegal.

Limits of Current US Prediction Markets (PredictIt Case Study)

Sure, happy to change it. Does 'Limits of current US Prediction Markets' plus some commentary at the top to the effect of 'this is based on a case study of PredictIt, per some comments if you are outside the US you may have better options' sound reasonable?

Limits of Current US Prediction Markets (PredictIt Case Study)

Ah, someone with the time and energy to proofread and LaTeX things for me! No objection, thank you very much! (I actually didn't know other people were able to edit my posts though, how does that work?)

Limits of Current US Prediction Markets (PredictIt Case Study)

Fair enough, that part is worded more strongly than I can really justify. I'd definitely still say it's quite possible that they are correct, and I still wouldn't think you can easily show them to be wrong by EMH-style reasoning.

Limits of Current US Prediction Markets (PredictIt Case Study)

It's possible! I'm writing this from a very US-based perspective, where the main prediction markets I hear talked about are PredictIt and IEM (and I think IEM might be even worse for betting at scale?) If you have access to a prediction market where these problems are smaller/nonexistent, it will be more accurate. And 2% charge of profits is much lower, plus looking quickly at the Betfair website it seems to have a pretty good amount of liquidity at a reasonably small spread.

I'm not sure how accessible Betfair is to someone from the US from a legal/tax standpoint, so the overall point may still stand if you're talking to someone in the US/if you think that a lot of the people informed on a given issue are in the US.

(And do you really have zero taxes on gambling profits? I would not have guessed that).

Limits of Current US Prediction Markets (PredictIt Case Study)

The +10 is because the 10% fee does not apply to your original $100, only to profits. So if you would have $250 without the fee, rather than 250 * 0.9 = $225, you end up with $235.

A toy model of the treacherous turn

Besides the obvious benefit of being awesome, I think there could be a more serious benefit to this. One extreme failure mode when imagining the behavior of an AI is not merely to fail to imagine it as being superintelligent but to imagine it as being less intelligent than yourself, as not doing things you could think of (a la That Alien Message). A game that consisted of you, the player, needing to come up with increasingly complicated ways to trick these 'shopkeeper' agents could illustrate this pretty neatly.

2014 iterated prisoner's dilemma tournament results

Something that bothers me about this tournament: I feel like a competitive tournament doesn't actually reward the kind of strategy that is meant to do well in Prisoner's Dilemna. As a (highly oversimplified) example, consider three bots who have the scores:

A: 10 B: 9 C: 2

Here, A is 'winning.' Suppose B can make a move that costs A 3 points and costs itself 1 point, leading to:

A: 7 B: 8 C: 2

B's payoff function has dropped. However, from a 'winning the tournament' approach, B has gone from 2nd to 1st, and so this outcome is now better for B. This feels wrong.

I doubt this was a really big issue here, but just on general principles I feel like competition by comparing scores is incompatible with a desire to explore the Prisoner's Dilemma, since you're turning a non-zero-sum game into a zero-sum game.

Rationality Quotes October 2014

The humans aren't doing what the math says. The humans must be broken.

SMBC on the Ultimatum Game

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