TL;DR: Whether Ćirković et al.'s Anthropic Shadow is philosophically legitimate or not, it contains a totally relevant intuition for profiting off prediction markets: if you're dead when the taxman comes, it doesn't matter how much you owe. As such, there's either an opportunity to make money by betting against x-risk-correlated events, or (once everyone's figured this out) prediction markets will systematically underestimate x-risk-correlated outcomes. In the post, I summarize a bit of the general debate about the Anthropic Shadow; then I present a toy model for the effect described, and a generalized version. I also list some candidate x-risk-correlated markets that could be vulnerable to the Anthropic Bias. Finally, I bring up and address some limitations I could think of—probably there are lots more, and I'd love to hear what they are!

What Am I Even Talking About?

In 2010, a group of astronomers and philosophers (including Nick Bostrom) published a paper arguing that we might be underestimating some kinds of existential risk, because we weren't taking into consideration the fact that we're all alive.

For example, if a very-deadly asteroid strike had ever occurred, it would probably have killed everyone—leaving no one to record it or study the frequency of deadly asteroid strikes. As a result, our own frequency-estimates of asteroid strikes may well be systematically biased, because we can only see asteroid-strike-histories compatible with continued existence.

In other words, all the counterfactual realities where catastrophic events have played out cast an "Anthropic Shadow" over our risk estimates: no observers exist within them, so we can never really see a fully-truly-representative sample.

Implicit in the paper is an acceptance of Bostrom's Self-Sampling Assumption (SSA), which holds that you should reason as if your existence was plucked randomly from the set of all existing observers, past, present, and future. The SSA is also behind Bostrom's earlier Doomsday Argument, which says that it's really surprising how early in the universe we all exist—how it's strange that we're here now, when there are so few people around, and how that implies that we probably don't have a very vast future full of observers ahead of us.

There's been a ton of debate in these parts on whether the Doomsday Argument is masturbatory nonsense, whether the Anthropic Shadow is mas...

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