Another solution for the insurance company is to have a market of “will more than 5% of the buildings in the city be burgled”. The only way to influence the market is to burgle a large number of buildings, which is presumably intractable for the participants in the market. You do have to adjust it for the specifics of the building you want to insure, but an insurance company probably wants to insure a broad swatch of buildings anyway.
If every building had insurance running said prediction market, you’re right back to the same tipping point where it’s advantageous for someone to hire burglars for 5% of the city.
(You can argue that it’s easier to hire one burglar undetected than 20,000[1]. But is it 20,000 times harder?)
I would suspect that it is more than 20,000 times harder. Either you need to hire 20,000 people simultaneously (are there even that many people in Ottawa willing to be burglars? that’s 2% of the population, and some are going to report you first) or you need an organization to run repeated burglaries without it being traced back to you. A sudden rash of burglaries is going to get a lot of attention. I suppose it might wind up being a way for existing burglary operations to get some extra profit on top though.
Of course, this whole situation is a bit absurd, and I think the original point of the post is roughly correct.
Another solution for the insurance company is to have a market of “will more than 5% of the buildings in the city be burgled”. The only way to influence the market is to burgle a large number of buildings, which is presumably intractable for the participants in the market. You do have to adjust it for the specifics of the building you want to insure, but an insurance company probably wants to insure a broad swatch of buildings anyway.
That just affects the scale.
If every building had insurance running said prediction market, you’re right back to the same tipping point where it’s advantageous for someone to hire burglars for 5% of the city.
(You can argue that it’s easier to hire one burglar undetected than 20,000[1]. But is it 20,000 times harder?)
http://documents.ottawa.ca/sites/documents.ottawa.ca/files/documents/adr_2014_en.pdf → 398,119 occupied dwellings in Ottawa (as of 2014; likely has since increased.)
I would suspect that it is more than 20,000 times harder. Either you need to hire 20,000 people simultaneously (are there even that many people in Ottawa willing to be burglars? that’s 2% of the population, and some are going to report you first) or you need an organization to run repeated burglaries without it being traced back to you. A sudden rash of burglaries is going to get a lot of attention. I suppose it might wind up being a way for existing burglary operations to get some extra profit on top though.
Of course, this whole situation is a bit absurd, and I think the original point of the post is roughly correct.
Much harder to put enough capital together to make it worthwhile,