My loose model is that increases in lethality tend, all else equal, to favor defenders.  Increases in operational mobility tend to favor attackers.  

At some point in any attack, you need to cover some ground where you are exposed to enemy fire from defenders with the advantage of a prepared position.  The more lethal their weapons, the harder that is and that's true even if your weapons are also more lethal because they have the advantage of a prepared position.  As currently used, drones boost lethality and they're also uniquely good against armor which has been the offensive weapon of choice on the modern, high-intensity conventional battlefield for attackers.  I guess that's fairly close to the "standard answer" you're giving above.

The second bit is that drones offer no operational mobility (as currently deployed).  To advance an offensive over any substantial distance, you need to move not just weapons systems but also people, platforms, and logistics forward.  That is, suppose you've either killed your enemies or forced their retreat from some given area, you need to consolidate control over it and be able to either prepare your own defenses against counterattack or establish a forward staging point for the next attack.  Mechanized or armored units do that pretty naturally; you're bringing people and supplies with you as you go and you can immediately use them for the next steps.  Drones don't.  If you've overrun a position with drones, there is no obvious next step save for finding a way to move people and vehicles forward, who then become vulnerable to enemy drones.

Another piece of it -- quite dependent on the present state of technology -- is that jamming is effective enough that most drones are limited to the range of however far they can trail a fiber optic cable which is only a few miles.  That rules out deep penetration with drones, again making it hard to follow up on any successes.  

It's fair to criticize Western militaries for not adapting to drones more quickly, especially on the defense-industrial side.  But, it's also wrong to frame this as a NATO disadvantage in strategic terms.

On the strategic level, you have to keep in mind that:

1. NATO is a defensive alliance  
2. NATO strategy has always been built from the premise that NATO is weakest (relative to rivals) in ground warfare.
3. With respect to Russia, a prolonged war of attrition overwhelmingly favors NATO.

On point #1, what we're seeing in Ukraine is that drones are tactically a defense-dominant weapon -- that is, they make it much harder to seize territory.  If there's a way to use them in successful, high-mobility offensive operations, no one has found it.  NATO's major goal has always been to defend European territory against Russian invasion.  Given the tactical balance of drones, even if Russia ends up the "drone-advantaged" side, it's still the case that the basically defensive nature of drones and the defensive aims on the NATO side probably end up favoring NATO.

On #2, NATO has always been built around having an edge in the air and sea (and nowadays space) compensating for relativeness weakness on the ground.  Historically, NATO faced substantial disadvantages on the ground relative to the Soviets, and NATO strategy was always about finding ways to use its other edges to compensate for that.  Post-Soviet Russia has never had the same kind of advantages on the ground, but this has still been the area of relative Russian strength.  With respect to frontline ground forces, even post-Soviet Russia would obviously have the edge in the initial stages of any conflict and that's been true ever since the end of the Cold War.

Drones don't do anything to challenge the NATO air/sea/space edge.  Cheap drones operate at low speed, low altitude, and short range.  Something that can match the speed, altitude, and range of a jet fighter is going to look a lot like (and cost a lot like) a jet fighter even it happens to be unmanned.  For the same reasons, drones are a threat to naval vessels operating close to shore, but so are speedboats, and there's no scenario where NATO is trying to put a carrier group 10 miles off the Russian coastline.  The situation in constricted waterways is different, and it's entirely possible that drones, speedboats, and perhaps speedboat drones will substantially deny naval access to the Bab al Mandab or the Strait of Hormuz.  But that's just not the Russian scenario and the only such constricted naval area there is the Baltic, where NATO controls the land.

On #3, Ukraine is gradually losing the war because Russia has 4x the population and over 10x the GDP.  In a Russia-NATO conflict, it's NATO with the overwhelming population and economic advantages.  So, if you bog down into a war of attrition, there's no doubt NATO wins it.  Again, if we see Ukraine-type dynamics, this is something that's better for NATO than the situation a decade ago because it makes it a lot harder for Russia to seize the Baltics in a blitzkrieg and then extend a nuclear umbrella over them.  

You're not wrong but you may be overinterpreting the significance of what you report.  It is true that you can never measure something truly continuous with infinite precision.  But, this isn't that interesting because there are physical limitations on measurement that are much more relevant in any given context.  The probability theory issue here (and the relevant mathematical terms if you want to follow up on this are "almost surely" and "measure zero) doesn't say anything about measuring as precisely as you'd like; it just rules out truly infinite precision.

I'm not a physicist, so this may not be quite right, but my basic understanding is that there are inherent physical limits on measurement precision and not merely apparatus-dependent ones.  That is one can't, in principle, measure anything shorter than a Planck length, for example.  

Interesting question.  The "base" unit is largely arbitrary, but the smallest subunit of a currency has more practical implications, so it may also help to think in those terms.  Back in the day, you had all kinds of wonky fractions but now basically everyone is decimalized, and 1/100 is usually the smallest unit.  I imagine then that the value of the cent is as important here as the value of the dollar.

Here's a totally speculative theory based on that.  

When we write numbers, we have to include any zeros after the decimal but you never need leading zeros on a whole number.  That is, we write "4" not "004" but if the number is "0.004" there is no compressed way of writing that out.  In book keeping, it's typical to keep everything right-aligned but it makes adding up and comparing magnitudes easier, so you'll also write trailing zeros that aren't strictly necessary (that is $4.00 rather than just $4 if other prices you're recording sometimes use those places).

This means if you have a large number of decimal places, book keeping is much more annoying and you have to be really careful about leading zeros.  Entering in a price as "0.00003" is annoying and easy to mess up by an order of magnitude without noticing.  Thus, having a decimalized currency with a really large base unit is a pain and there's a natural tendency towards a base unit that allows a minimum subunit of 0.01 or so to be sensible.

This only works if you're the only bookmaker in town.  Even if your potential counterparties place their own subjective odds at 1:7, they won't book action with you at 1:7 if they can get 1:5 somewhere else.

Perhaps I misread OP's motivations, but presumably if you're looking to make money on these kinds of forecasts, you'd just trade stocks.  Sure, you can't trade OpenAI per se, but there are lot of closely related assets and then you're not stuck in the position of trying to collect on a bet you made with a stranger over the internet.

So, the function of offering such a "bet" is more as a signaling device about your beliefs.  In which case, the signal being sent here is not really a bearish one.  

If you think there's a 40% chance of a crash, then that's quite the vig you're allocating yourself on this bet at 1:7.  

These are very poor odds, to the point that they seem to indicate a bullish rather than a bearish position on AI.

There's definitely a better than 1 in 7 chance of a general market crash in the next year, given tariffs and recession risk (or, if you define crash loosely, we've already had one).  Given that broader macro risk, merely 1 in 7 of an AI crash probably implies a forecast that AI will outperform the broader market.

If, for whatever reason, one is willing to disregard the macro risk, then there's a lot more upside in just buying QQQ than taking your bet.  

There's a kind of paradox in all of these "straight line" extrapolation arguments for AI progress as your timelines assume (e.g., the argument for superhuman coding agents based on the rate of progress in the METR report).

One could extrapolate many different straight lines on graphs in the world right now (GDP, scientific progress, energy consumption, etc.).   If we do create transformative AI within the next few years, then all of those straight lines will suddenly hit an inflection point.  So, to believe in the straight line extrapolation of the AI line, you must also believe that almost no other straight lines will stay that way.

This seems to be the gut-level disagreement between those who feel the AGI and those who don't; the disbelievers don't buy that the AI line is straight and thus all the others aren't.  

I don't know who's right and who's wrong in this debate, but the method of reasoning here reminds me of the viral tweet: "My 3-month-old son is now TWICE as big as when he was born. He's on track to weigh 7.5 trillion pounds by age 10."  It could be true, but I have a fairly strong prior from nearly every other context that growth/progress tends to bend down into an S-curve at one point or another, and so these forecasts seems deeply suspect to me unless there's some kind of better reason to suspect that trends will continue along the same path.

So, I certainly wouldn't expect the AI companies to capture all the value; you're right that competition drives the profits down.  But, I also don't think it's reasonable to expect profits to get competed down to zero.  Innovations in IT are generally pretty easy to replicate, technically speaking, but tech companies operate at remarkably high margins.   Even at the moment, your various LLMs are similar but are not exact substitutes for one another, which gives each some market power.