For long term bets, where the opportunity cost of tying money up in these bets becomes high, I would have thought that the bets should be denominated in US bonds (or other agreed minimal-risk interest rate asset) to minimize this cost.
Even if the bet does not pay out one way or another, the money still accumulates interest.
Other than being incompatible with Augur, are there any theoretical or practical hurdles to using this? It would hopefully reduce the subsidy required to make an attractive market without incurring cost in and of itself.
Paying in some reasonable investment is an improvement, and in a world with different ‘right’ investments would be a bigger one, but tying up the money that long in a sufficiently safe investment is still pretty expensive.
It would be interesting if one could bet, say, shares of SPY US plus associated dividends, so you were leaking a lot less alpha. Of course, that changes the odds on long bets quite a bit if they are correlated with SPY US, which most of them will be.
For long term bets, where the opportunity cost of tying money up in these bets becomes high, I would have thought that the bets should be denominated in US bonds (or other agreed minimal-risk interest rate asset) to minimize this cost.
Even if the bet does not pay out one way or another, the money still accumulates interest.
Other than being incompatible with Augur, are there any theoretical or practical hurdles to using this? It would hopefully reduce the subsidy required to make an attractive market without incurring cost in and of itself.
Paying in some reasonable investment is an improvement, and in a world with different ‘right’ investments would be a bigger one, but tying up the money that long in a sufficiently safe investment is still pretty expensive.
It would be interesting if one could bet, say, shares of SPY US plus associated dividends, so you were leaking a lot less alpha. Of course, that changes the odds on long bets quite a bit if they are correlated with SPY US, which most of them will be.