the biggest problems are you can make way more money by making trades than predictions, it’s unclear what role money will play in a post AGI world, etc.
maybe the following solves a significant fraction of that problem: you could buy an asset together and have the event being predicted determine the owner. like, to make a bet at 30%, instead of one party putting 30 cents and the other party putting 70 cents in a jar and having the 1 dollar go to the party that predicted correctly once the question is resolved, you could do this with 1 dollar’s worth of an SP500 index fund or any other asset.[1][2]
not sure why kalshi hasn’t implemented this already btw — seems like a central issue with current prediction markets. maybe there’s a regulatory obstacle. or maybe they are already putting the money traders put in their jars in low-risk assets, just not passing the interest on to traders (except in the form of it enabling lower fees or whatever).
ok for vanilla bets not on prediction markets, one doesn’t actually need to store the money in a jar. i think this fixes one way this jar business is bad but not some other ways
yea probably. still, if you have parties at 40% and 60% and they do this asset bet at 50:50, then each guy’s subjective expected money is 20% higher than if they just buy the asset without the bet. seems nontrivial. this will be less impressive in log money as you start putting a larger fraction of your money in a single bet but idk you try to spread across many bets that are not too correlated and then i think it looks good again
Surely not any monetary stakes
the biggest problems are you can make way more money by making trades than predictions, it’s unclear what role money will play in a post AGI world, etc.
maybe the following solves a significant fraction of that problem: you could buy an asset together and have the event being predicted determine the owner. like, to make a bet at 30%, instead of one party putting 30 cents and the other party putting 70 cents in a jar and having the 1 dollar go to the party that predicted correctly once the question is resolved, you could do this with 1 dollar’s worth of an SP500 index fund or any other asset. [1] [2]
not sure why kalshi hasn’t implemented this already btw — seems like a central issue with current prediction markets. maybe there’s a regulatory obstacle. or maybe they are already putting the money traders put in their jars in low-risk assets, just not passing the interest on to traders (except in the form of it enabling lower fees or whatever).
ok for vanilla bets not on prediction markets, one doesn’t actually need to store the money in a jar. i think this fixes one way this jar business is bad but not some other ways
presumably the vast majority of the variance is in how the SPY (or other asset) moves due to AGI, than the bet itself.
yea probably. still, if you have parties at 40% and 60% and they do this asset bet at 50:50, then each guy’s subjective expected money is 20% higher than if they just buy the asset without the bet. seems nontrivial. this will be less impressive in log money as you start putting a larger fraction of your money in a single bet but idk you try to spread across many bets that are not too correlated and then i think it looks good again
This is an interesting idea