Assuming the 99.9% / 0.1% trick does work and there are large numbers of markets to compensate for the small chance of any given market resolving, what would be the defense against actors putting large bets on a single market with the sole intent of skewing the signal? If the vast majority of bets are consequence-free, it seems:
(1) the cost of such an operation would be comparatively cheaper, and
(2) the incentive for rational profit-seeking traders to put enough volume of counter-bets to “punish” that would be comparatively smaller,
There’s correspondingly more liquidity subsidies on these markets, which makes the consequences the same in expectation (i.e., others would love to eat your free money by correcting the attempted manipulation just as much as they would on normally structured decision markets). Everyone just makes bets 1000x larger than they normally would.
Yes, in expectation. But you’re adding a lot of variance. I thought the stochasticity of the punishment affects its effectiveness, and that’s a tradeoff you make to get the causal structure.
Assuming the 99.9% / 0.1% trick does work and there are large numbers of markets to compensate for the small chance of any given market resolving, what would be the defense against actors putting large bets on a single market with the sole intent of skewing the signal? If the vast majority of bets are consequence-free, it seems:
(1) the cost of such an operation would be comparatively cheaper, and
(2) the incentive for rational profit-seeking traders to put enough volume of counter-bets to “punish” that would be comparatively smaller,
than in a regular (non-N/A resolving) market.
There’s correspondingly more liquidity subsidies on these markets, which makes the consequences the same in expectation (i.e., others would love to eat your free money by correcting the attempted manipulation just as much as they would on normally structured decision markets). Everyone just makes bets 1000x larger than they normally would.
Yes, in expectation. But you’re adding a lot of variance. I thought the stochasticity of the punishment affects its effectiveness, and that’s a tradeoff you make to get the causal structure.