On Robin Han­son’s Board Game

Pre­vi­ously: You Play to Win the Game, Pre­dic­tion Mar­kets: When Do They Work?, Sub­sid­iz­ing Pre­dic­tion Markets

An Ana­lysis Of (Robin Han­son at Over­com­ing Bias): My Mar­ket Board Game

Robin Han­son’s board game pro­posal has a lot of in­ter­est­ing things go­ing on. Some of them are re­lated to cal­ib­ra­tion, up­dat­ing and the price dis­cov­ery in­her­ent in pre­dic­tion mar­kets. Oth­ers are far more re­lated to the fact that this is a game. You Play to Win the Game.

Rules Summary

Dol­lars are rep­res­en­ted by poker chips.

Me­dia that con­tains an un­known out­come, such as that of a murder mys­tery, is se­lec­ted, and sus­pects are picked. Play­ers are given $200 each. At any time, play­ers can ex­change $100 for a con­tract in all pos­sible sus­pects (one of which will pay $100, the rest of which will pay noth­ing).

A mar­ket is cre­ated for each sus­pect, with steps at 5, 10, 15, 20, 25, 30, 40, 50, 60 and 80 per­cent. At any time, each step in the mar­ket either con­tains dol­lars equal to its prob­ab­il­ity, or it has a con­tract good for $100 if that sus­pect is guilty. At any time, any player can ex­change one for the other – if there’s a con­tract, they can buy it for the lis­ted prob­ab­il­ity. If there’s chips there, you can ex­change a con­tract for the chips. Who­ever phys­ic­ally makes the ex­change first wins the trade.

At the end of the game, the win­ning con­tract pays out, and the player with the most dol­lars wins the game.

Stages of Play

We can di­vide play­ing Robin’s game into four dis­tinct stages.

In stage one, Setup, the source ma­ter­ial we’ll be bet­ting on is se­lec­ted, and the sus­pects are gen­er­ated.

In stage two, the Early Game, play­ers re­act to in­cre­mental in­form­a­tion and try to im­prove their equity, while keep­ing an eye out for con­trol of vari­ous sus­pects.

In stage three, the Late Game, play­ers com­mit to which sus­pects they can win with and lock them up, selling off any­thing that can’t help them win.

In stage four, Res­ol­u­tion, play­ers again scramble to dump now-worth­less con­tracts for whatever they can get and to buy up the last of the win­ning con­tracts. Then they see who won.


Not all mys­ter­ies will be good source ma­ter­ial. Nor do you ob­vi­ously want a ‘cer­ti­fied good’ source. That’s be­cause know­ing the source ma­ter­ial cre­ates a good game, is a huge up­date.

A proper mul­tiple-sus­pects who-done-it that keeps every­one in sus­pense by design keeps the scales well-bal­anced, en­sur­ing that early res­ol­u­tions are fake outs. That can still make a good game, but an even more in­ter­est­ing game car­ries at least some risk that sus­pects will be defin­it­ively elim­in­ated early, or even the case solved quickly. Com­edy routines some­times refer to the is­sue where they ar­rest someone on Law & Order too early in the epis­ode, so you know they didn’t do it!

When watch­ing sports, a sim­ilar di­lemma arises. If you watch ‘clas­sic games’ or oth­er­wise en­sure the games will be good, then the first half or more of the game is not ex­cit­ing. Do­ing well early means the other team will catch up. So you want to choose games likely to be good, but not fil­ter out bad games too ag­gress­ively, and learn to en­joy the oc­ca­sional de­moli­tion.

The setup is also a giveaway, if it was se­lec­ted by someone with know­ledge of the ma­ter­ial. At a min­imum, it tells us that the list is reas­on­ably com­plete. We can cer­tainly in­tro­duce false sus­pects that should right­fully trade near zero from the start, to mix things up, and likely should do so.

One solu­tion would be to have an un­known list of con­tracts at the start, and in­tro­duce the names as you go along. This would also po­ten­tially help with pre­vent­ing a rush of trades at the very start.

In this model, you can al­ways ex­change $100 for a con­tract on each ex­ist­ing sus­pect, and a con­tract for ‘Someone You Least Sus­pect!’ Then, when a new sus­pect is in­tro­duced, every­one with a ‘Someone You Least Sus­pect!’ con­tract gets a con­tract in the new sus­pect for free for each such con­tract they hold. There are sev­eral choices for how one might in­tro­duce new sus­pects. They might un­lock at fixed times, or play­ers could be al­lowed to in­tro­duce them by buy­ing a con­tract.

The com­plex­ity cost of hid­ing the sus­pects, or let­ting them be de­term­ined by the play­ers, seems too high for the de­fault ver­sion. It pro­tects the fun of the movie and has some nice prop­er­ties, but for the base game you al­most cer­tainly want to lay out the sus­pects at the start. This gives a lot away, but that’s also part of the game.

For the first few games played, it prob­ably makes sense to choose mys­ter­ies ‘known to be good’ such as a clas­sic Agatha Christie.

The game would pre­sum­ably come with a web­site that al­lowed you to in­put a movie, show or other me­dia, and out­put a list of sus­pects. It would also want to ad­vise play­ers on whether their se­lec­tion was a good choice, or sug­gest good choices based on se­lec­ted cri­teria. Both will need to be bal­anced to avoid giv­ing too much away, as noted above; I’ll talk more about the gen­eral ver­sion of this prob­lem an­other time.

If you are in charge of setup, I would en­cour­age in­clud­ing at least one sus­pect that ob­vi­ously did not do it, in a way that is easy to re­cog­nize early. This pre­vents play­ers from as­sum­ing that all sus­pects will re­main in play the whole time, and re­wards those pay­ing at­ten­tion early. Keep people on their toes.

The Early Game

The mar­ket maker is in­ten­tion­ally dumb, al­though in de­fault mode they are smart enough to know who the sus­pects are. All sus­pects start out equal.

There are a bunch of good heur­ist­ics, many of which should be in­tu­it­ive to many view­ers of mys­ter­ies, that cre­ate strong trad­ing op­por­tun­it­ies right away. To state the most ba­sic, the earlier a sus­pect first ap­pears on the screen, the more likely they are to have done the deed. So the mo­ment one of the sus­pects ap­pears – ‘That’s Bob!’ – every­one should rush to buy Bob, and per­haps sell every­one else if trad­ing costs make that a good idea. How far up to buy him, or sell oth­ers, is an open ques­tion.

That will be the first of many times when there will be an ‘ob­vi­ous’ up­date. There will also be non-ob­vi­ous up­dates. Stay­ing phys­ic­ally close to the board, chips and/​or con­tracts ready to go, is key to make sure you get the trade first. This im­plies that mak­ing a race de­pend on the phys­ical ex­change of items might be a prob­lem. Let­ting it be verbal (e.g. who­ever first says ‘I buy Bob’) pre­vents that is­sue, but risks am­bi­gu­ity.

What char­ac­ter­izes the early game, as op­posed to the late game, is that the fo­cus is on ‘make good trades’ rather than on win­ning. There’s no reason to worry too much about who owns how many of each con­tract, un­less someone is in­ves­ted heav­ily in one par­tic­u­lar sus­pect. We can think of that as a player choos­ing to enter the en­dgame early.


Robin notes an in­ter­est­ing phe­nomenon, that play­ers got caught up in the day trad­ing and neg­lected to watch the mys­tery. Where should the smart player dir­ect the bulk of their at­ten­tion?

That de­pends upon your model of murder mys­ter­ies.

One model says that murder mys­ter­ies are ‘fair’. Clues are in­tro­duced. If you pay at­ten­tion to those clues, you can fig­ure out who did it be­fore the de­tect­ive does. When the de­tect­ive solves the mys­tery, you can verify that the solu­tion is cor­rect once you hear their lo­gic. If you can solve the mys­tery first, you can sell every worth­less con­tract and buy all the worth­while con­tracts. Ideally, that should be good enough to win the game, es­pe­cially if you ex­ecute prop­erly, selling and buy­ing in bal­ance without giv­ing away that you be­lieve you’ve solved the mys­tery.

Another re­lated model says that murder mys­ter­ies fol­low the rules of murder mys­ter­ies, and that this of­ten is good enough to nar­row down or identify the killer. That way-too-fam­ous-for-his-role actor is ob­vi­ously the killer. Another would-be sus­pect was in­tro­duced at the wrong time, so she’s out. A third could eas­ily have done it, but that wouldn’t work with the them­atic ele­ments on dis­play.

A third model says that the de­tect­ive, or oth­ers in the movie, have a cer­tain cred­ib­il­ity. Thus, when Sh­er­lock Holmes says that Bob is in­no­cent, that is that. Bob is in­no­cent. You don’t need to know why. Evid­ence oth­er­wise might not mean much, but there’s someone you can trust.

Func­tion­ally, these three are identical once you know what factors you’r re­act­ing to. They say that (some kinds of) evid­ence count as evid­ence, and res­ult­ing up­dates are real. The more you be­lieve this, the more you should pay at­ten­tion to the movie. This in­cludes try­ing early on to fig­ure out what type of movie this is. Be Genre Savvy! Until you know what rules ap­ply, don’t worry too much about day trad­ing, un­less people are go­ing nuts.

A fourth model says that the mys­tery was chosen for a reason, and writ­ten to keep up sus­pense, so noth­ing you learn mat­ters much bey­ond es­tab­lish­ing who the sus­pects are. The game already did that for you. Un­less the game fol­lowed my ad­vice and in­cluded an ob­vi­ously fake sus­pect or two, to pun­ish play­ers who only look at trad­ing.

If you be­lieve this model, and don’t think there is news and there aren’t fake sub­jects (or that they will be suf­fi­ciently ob­vi­ous you’ll know any­way, if only by how oth­ers talk and act) then you won’t put as much value on watch­ing the movie. If trad­ing has good ac­tion, trad­ing might be a bet­ter bet.

A fifth model that can over­lap with the pre­vi­ous mod­els says that oth­ers will watch the movie and pro­cess that in­form­a­tion, so there’s no need to watch your­self if there are enough other play­ers. You might think that there is then a mo­mentum ef­fect, where play­ers are un­will­ing to trade ag­gress­ively enough on new in­form­a­tion. Or you might think that play­ers over­re­act to new in­form­a­tion, es­pe­cially if you’re a forth-model (noth­ing mat­ters, eat at Arby’s) kind of the­or­ist.

If you feel oth­ers can be re­lied on to re­act to news, you might trade on news even if you don’t think it mat­ters, be­cause oth­ers will trade after you, and you can then cash out at a quick profit. Just like in the real mar­kets.

Or you might con­cen­trate on ar­bit­rage. Robin ob­served that play­ers would fo­cus on buy­ing good sus­pects rather than selling poor sus­pects, and this of­ten res­ul­ted in prob­ab­il­it­ies that summed to more than 100%. This of­fers the chance for risk-free profits, plus the chance to place whatever bet you like best while cash­ing in.

In my mind, the ques­tion boils down to where the game will be won and lost. Is there enough profit in day trad­ing to beat the per­son who placed the largest bet on the guilty party? What hap­pens in the en­dgame?

The End Game

A player enters the en­dgame when they at­tempt to en­sure that they win if a par­tic­u­lar sus­pect is guilty.

This is not as dif­fi­cult as it looks, and could be quite dif­fi­cult to fight against. Sup­pose I want to bet on Alice be­ing the cul­prit. I could sell all other sus­pects and buy her con­tracts. As a toy ex­ample, lets say there are four sus­pects, and lets say I de­cide to butcher my ex­e­cu­tions. I sell the oth­ers for $20 and $15 each, and buy Alice for $25, $30 and $40.

If the game ends and Alice is guilty, I made $105 selling worth­less con­tracts, and made $195 buy­ing Alice con­tracts, for a net profit of $295. If she’s in­no­cent, I col­lect noth­ing, so I paid $105 for Alice con­tracts and made $105 selling other con­tracts, so I’m just out my ini­tial $200 and die broke. That’s really, really ter­rible odds if I chose Alice at ran­dom!

But if it’s a 10 per­son game and I do that, even if I chose at ran­dom, 25% of the time Alice is guilty. Can someone else make more than $295 to beat me?

If after I fin­ish, oth­ers re­turn all the prices to nor­mal, then someone else could profit from my ini­tial haste, then ex­ecute the same trades I did at bet­ter prices. If that hap­pens, I’m shut out.

That works if you jump the gun, and enter the en­dgame too early. That’s true even if Alice is the most likely sus­pect.

In par­tic­u­lar, oth­ers now need to make a choice. Lets say I went all in on Alice. There are three ba­sic ap­proaches on how to re­spond:

  1. Aban­don Alice. If Alice is guilty, you’ve lost. So it’s safe to as­sume Alice is in­no­cent, and sell any Alice con­tracts at their new higher prices, es­pe­cially once you’re broke and no longer can buy any more. If this en­cour­ages someone else to take op­tion 2 and also move in on Alice, even bet­ter, that’s one less per­son who can beat you if Alice is in­no­cent. The ma­jor­ity of play­ers should do this.

  2. At­tack Alice. If oth­ers are abandon­ing Alice in droves, her price might col­lapse even bey­ond $25 as people rush to sell. You can then pick con­tracts up cheap, sell other con­tracts at bet­ter prices, and have a strictly bet­ter po­s­i­tion.

  3. Ar­bit­rage. Try to make as much money off the situ­ation as pos­sible, without com­mit­ting to a dir­ec­tion. If people are be­ing ‘too stra­tegic’ and too eager to get where they want to go, rather than fo­cus­ing on get­ting the best price, then by mak­ing good trades (sell Alice when I buy too quickly, buy when oth­ers sell too quickly) and for­cing oth­ers to get worse prices, I can end up with more value, then de­cide later what to do.

If you only en­gage in ar­bit­rage, and oth­ers com­mit to sus­pects, you’ll be in a lot of trouble un­less you’ve already made a ton, be­cause you won’t have any­one to trade against. Your only op­tion be­comes to trade with the mar­ket, which lim­its how much you can get on the sus­pect you fi­nally de­cide to go with, even if the mys­tery is solved while the mar­ket is open, and you’re the only one left with cash.

The good and bad news is that’s un­likely to hap­pen, as oth­ers will also ‘stick around’ with flex­ible port­fo­lios. That means that you won’t be able to make that much when the mys­tery gets solved, but it does mean you can di­vide the spoils. If six play­ers com­mit to sus­pects while four make good trades, not only are two of the six already shut out, it’s likely the re­main­ing four can co­ordin­ate (or just do sens­ible trades) to win if two or three of the sus­pects are found guilty, and some­times should be able to nail all four.

When you have four (or six) sus­pects and ten play­ers, there are not enough sus­pects for every­one to own one, and there cer­tainly aren’t enough for any­one to own two. That means that even if a sus­pect looks likely to be guilty, if you know you can’t win that scen­ario, you’ll be dump­ing, and that means at least seven of ten people are dump­ing any given sus­pect if they un­der­stand the game.

The lo­gical re­sponse to this is to stay far enough ahead on your sus­pect that you clearly win if they’re guilty, and if you get a good early op­por­tun­ity to dump other con­tracts you should def­in­itely do that. Good trades are gen­er­ally good, and those trades just got even bet­ter, es­pe­cially if every­one fo­cuses on buy­ing rather than selling. What you don’t want to do is over­pay, or run out of cash (and/​or run out of things you can sell).

Thus, I might buy the Alice $20, $25 and Alice $30 con­tracts, and start selling con­tracts on sus­pects I think are trad­ing rich. What I’m wor­ried about is com­pet­i­tion – I don’t want other play­ers buy­ing Alice con­tracts, so if they do, I’ll make sure they don’t get size off by buy­ing at least at their price, and I’ll make sure to stay ahead of them on size. I’ll also think about whether the re­main­ing play­ers are soph­ist­ic­ated enough to sell what they have, even at lousy prices; if they are, I’ll be care­ful to hold a bunch of cash in re­serve. If there are ten play­ers, I can ex­pect there to ex­ist 16-25 Alice con­tracts, and I want to be sure not to run out of money.

Rank Ordering

This sug­gests each player has a few dif­fer­ent goals.

You want to ac­cu­mu­late con­tracts in sus­pects you ‘like’ (which mostly means the ones you think are good bets), so you can get ‘con­trol’ of one or more of them. Con­trol means that if they did it, you win.

You want to get rid of con­tracts in the sus­pects you don’t like. The trick here is that some­times the price will go su­per high (re­l­at­ive to the prob­ab­il­ity they did it) as mul­tiple play­ers com­pete to gain ‘con­trol’ of the sus­pect. Other times, the price will col­lapse be­cause there is only one bid­der for con­trol of that sus­pect. If one player gets a bunch of con­tracts, and is in good over­all shape, then no one else will com­pete.

That in turn might drive the price so low – $10 or even $5 – that the value of their port­fo­lio shrinks a lot, tempt­ing an­other player to enter, but do­ing so would drive the price up right away, so it of­ten doesn’t make sense to com­pete. If Bob is buy­ing up Alice con­tracts and Carol now buys one at $10, who is go­ing to sell one now? Much bet­ter to wait to see if the price goes higher, which in turn puts Bob back in con­trol. The flip side of that is, if Carol can buy a $10 and a $15 con­tract, and force Bob to then pay $20, Carol can sell back to Bob at a profit. It’s a risky bluff if oth­ers are act­ively selling, but it can def­in­itely pay off.

The key in these fights is who has more over­all port­fo­lio value, plus the trans­ac­tion costs of mov­ing into more con­tacts. If Carol can make $100 trad­ing back and forth in other con­tracts, Bob is go­ing to have a tough time keep­ing con­trol, and mostly has to hope that Carol chooses to go after a dif­fer­ent sus­pect. By be­ing in as good shape as pos­sible, Bob both is more likely to win the fight, and (if oth­ers real­ize this) more likely to avoid the fight.

With a lot of play­ers en­gaged in act­ive day trad­ing, and aren’t stra­tegic­ally fo­cused, trans­ac­tion costs could be low. If they’re suf­fi­ciently low, then it could be a long time be­fore it is hard to buy and sell what you want at a reas­on­able price, post­pon­ing the end game un­til quite late. The more other play­ers are stra­tegic­ally fo­cused, and strategy de­term­ines price, the harder it is to trade, the more ex­ist­ing po­s­i­tion­ing mat­ters and the less you can try to day trade for profit other than an­ti­cip­at­ing a fight over a sus­pect, or a dump of them.

Rich Player, Poor Player

Sup­pose you’re a poor player. You made some trades, and they didn’t work out. Per­haps you held on to a sus­pect or two too long, and oth­ers dumped them, either stra­tegic­ally or for value. Per­haps you had a hunch, got over­ex­cited, and oth­ers dis­agreed, and now you’re look­ing fool­ish. Now you only have (let’s say) $120 in equity, down from $200.

You Play to Win the Game. How do you do that? There are more play­ers than sus­pects, sev­eral of whom have double your stake. So you’ll need to find a good gam­bit.

A ba­sic gam­bit would be to buy up all the con­tracts you can of a sus­pect every­one has dis­missed. Even if there are very good reas­ons they seem im­possible and are trad­ing at $5, you can still get enough of them to win if it works out, and you might have no com­pet­i­tion since play­ers in bet­ter shape have juicier tar­gets. Slim chance beats none.

But if even that’s out of the ques­tion, you’ll have to re­build your po­s­i­tion. You will need to spec­u­late via day trad­ing. Any other play locks in a loss. You find your­self in a hole, and have no choice but to keep dig­ging. Small ar­bit­rage won’t work. Your best bet is likely to watch the screen and listen, and try to re­act faster than every­one else in the hopes that the latest de­vel­op­ment is huge or seen as huge, then turn around and sell your new po­s­i­tion to oth­ers to make a quick buck. Then hope there’s still enough twists to do this again.

If the en­dgame has ar­rived, and rich play­ers are sit­ting on or fight­ing for all the sus­pects, you’ve lost. Your best bet is to con­sol­id­ate into cash, and hope some sus­pect crashes down to $5 for you.

Now sup­pose you’re a rich player. You have $300 in equity. How do you max­im­ize your chance of win­ning?

The ba­sic play is to corner the mar­ket on the most likely sus­pect, or who­ever you think is most likely. If you make a strong move in, you should be able to scare off com­pet­i­tion, and even if you don’t do so, you can use that as an op­por­tun­ity to make more profit if they drive the price up. At some point, oth­ers will have to dump, and you can af­ford to give them a good price if you have to. It’s hard to win a fight when out­gunned. The key is not to en­gage too much too soon, as this risks let­ting a third player take ad­vant­age of an as­set dump later. So you’ll want to hold some cash for that, if pos­sible. Re­mem­ber that you’ll need some­thing like 12-14 con­tracts to feel safe from a dump, de­pend­ing on how much equity you’ve built, if you’re out of cash. That shuts out other play­ers.

The ad­vanced play, if you’re suf­fi­ciently far ahead, is to try to win on mul­tiple sus­pects. That’s su­per hard. Even if you had $400 in equity, if you di­vide it in half, there are still mul­tiple other play­ers over $200. It seems un­likely you can get con­trol of mul­tiple worth­while sus­pects. There’s no point in try­ing for mul­tiple bar­gain base­ment sus­pects at the ex­pense of one good one, even if it works. So is there any hope here?

I think there is, in the scen­ario where there is a clear prime sus­pect.

In this scen­ario, the prime sus­pect was bid high early on. Given Robin’s notes about player be­ha­vior and tend­ency to push prices too high, and the battle for con­trol of the sus­pect, prices might get very high very quickly. There also may be play­ers who will re­fuse to sell their con­tracts in the prime sus­pect, be­cause they don’t real­ize that they’re shut out of win­ning in that case. Either they’re max­im­iz­ing ex­pec­ted value rather than chance of win­ning, or they don’t real­ize the prob­lem, or both.

This could open up an op­por­tun­ity where the ‘net profit’ on the prime sus­pect isn’t that high for any player. Sup­pose they start at $25, and every­one starts with their two con­tracts. They then trade at $30, $40, $50 and $60 in a row, not all to the same player. So there’s min­imal chances to buy con­tracts that make you that much money. If you buy an $80 con­tract your max­imum profit is $20, which is easy to beat by day trad­ing.

So what you can do is go for the block. Hope­fully you helped drive the price up early, which is part of how you got your equity. Then con­tracts only really traded at $60 and $80. So even if the sus­pect is guilty, someone who moved in on this without day trad­ing first is not go­ing to end up with many con­tracts. You start with $200, so lets say they end up with 3 con­tracts and a little cash.

It’s not crazy for you to sell the sus­pect at the top, do some suc­cess­ful day trad­ing, and then have over $300 in cash. You could win without any con­tracts that pay out, if you know you’re the most suc­cess­ful day trader and no one can have that many con­tracts.

That’s a bet­ter po­s­i­tion than hav­ing 5 or 6 con­tracts in the prime sus­pect, since you still have cash if they’re in­no­cent. The trick is then hav­ing that be enough to win on an­other sus­pect as well, or split­ting your ef­forts by hold­ing onto con­tracts else­where. Tricky. But per­haps not im­possible, es­pe­cially if people are dump­ing con­tracts at $5.

At a min­imum, what you can do is be in a strong po­s­i­tion to re­spond to new de­vel­op­ments, and be able to choose which other sus­pect to back later in the game if you now think they’re more likely, while still win­ning if the situ­ation doesn’t change. That’s very strong.

A fi­nal note is that it is legal, in the game, to trade with an­other player without go­ing through the mar­ket. This could be used to buy out a play­ers’ po­s­i­tion in a sus­pect, shift­ing con­trol of that sus­pect, and avoid the is­sue where once a player starts dump­ing a po­s­i­tion, the price will col­lapse, as well as the abil­ity of other play­ers to ‘in­ter­cept’ the trans­fer and ruin the buy­ers’ at­tempt to ac­cu­mu­late a new po­s­i­tion and take con­trol. Thus, play­ers should learn that if they have a bunch of con­tracts and want out, they should check for a bulk buyer, and if they want in they should con­sider do­ing the same. The risk of course is that you tip your hand, which makes do­ing it on the buy side less at­tract­ive.

Flex­ible Structures

It’s also worth not­ing that you can ex­tend the idea eas­ily to other pre­dic­tion mar­kets, and to an on­line ver­sion.

You could trade on the out­come of a sport­ing event, or an elec­tion, or any other real-world pre­dic­tion mar­ket, us­ing the same rules. You could play a board game, and also play the con­tract game on the out­come of your board game. That gives play­ers some­thing to do between turns and ex­tra things to think about, and gives ex­tra play­ers or elim­in­ated play­ers some­thing to do.

You could trade over a series of out­comes or events (for ex­ample, all the foot­ball games played today, or both the win­ner of the game and the com­bined num­ber of points scored, or even ob­scure stuff too like num­ber of punts or what not) in or­der to re­ward more trad­ing ‘for value’ and place less em­phasis on be­ing right. Or just keep track of funds between games, watch mul­tiple shows, and re­ward the over­all win­ner.

That raises the ques­tion of what we can learn about pre­dic­tion mar­kets from the game.

Mar­ket Ac­cur­acy and Implications

Early in the game, mar­ket prices should roughly re­flect fair prob­ab­il­it­ies of be­ing guilty. Anyone who jumps the gun for stra­tegic po­s­i­tion­ing will lose out to a more pa­tient player. That won’t stop play­ers from be­ing over­eager, and bid­ding sus­pects up too high, but as Robin noted that opens the door for oth­ers to do ar­bit­rage and sell the con­tracts back down to reas­on­able prices.

Later in the game, prices will grow in­creas­ingly in­ac­cur­ate as play­ers jockey for po­s­i­tion, and let stra­tegic con­sid­er­a­tions over­ride equity con­sid­er­a­tions.

This is a phe­nomenon we see in many stra­tegic games. Early in the game, play­ers mostly are con­cerned about get­ting good value, as most as­sets are vaguely fun­gible and will at some point be use­ful or ne­ces­sary. As the game pro­gresses, play­ers de­velop spe­cial­ized strategies, and start to do whatever they need to do to get what they need, of­ten at ter­rible ex­change rates, and dump or ig­nore things they don’t need, also at ter­rible ex­change rates.

If we wanted to im­prove ac­cur­acy, we’d need to make the game less stra­tegic and more tac­tical, by re­ward­ing play­ers who max­im­ize ex­pec­ted profits. There’s a dumb mar­ket that is hand­ing out Free Money when news oc­curs. We’d like play­ers to battle for a share of that pie, rather than com­pet­ing for con­trol of sus­pects. If the game was played over many rounds, the early rounds would mostly fo­cus on ex­pec­ted value and do­ing good trades. If the game was played for real money, and settled in ac­tual dol­lars, then we’d def­in­itely have a lot more ac­cur­ate pri­cing!

If a mar­ket has traders purely mo­tiv­ated by ex­pec­ted value and profit, then its pri­cing will be as good as the pri­cing abil­ity of the traders.

If a mar­ket has a few ‘mo­tiv­ated’ traders, or noise traders, that are do­ing some­thing for reas­ons other than ex­pec­ted value, that is good. You need a source of free money to make the mar­ket work. Thus, the ex­ist­ence of the bank, as a source of free money, is great, be­cause it mo­tiv­ates the game. You can ima­gine a ver­sion of the game where play­ers can only trade when they agree to it. There would still be trades, since the prize for win­ning should over­come fric­tions and ad­verse se­lec­tion, but volume of trad­ing would plum­met.

If a mar­ket has a few people who have poor fair val­ues, that works like mo­tiv­ated traders.

If a mar­ket has too many traders who have poor fair val­ues, or in con­text they have fair val­ues that are not based on the ex­pec­ted pay­out, then re­la­tion­ships break down. There’s now profit for those who bet against them, but that doesn’t mean there’s enough money in the wings to bal­ance things out. At some point that money is ex­hausted, and no one pay­ing at­ten­tion has spare funds. Prices stop be­ing ac­cur­ate, to vary­ing de­grees.

In par­tic­u­lar, this il­lus­trates that if those man­aging the money have pay­outs that are non-lin­ear func­tions of their profits, then very weird things will hap­pen. If I get fired for miss­ing my bench­mark, and so do my col­leagues, but we don’t get ex­tra fired for miss­ing them by a lot, then this will lead us to dis­count tail risks. In the game, this takes the form of dump­ing sus­pects you can’t con­trol – if Alice did it, you’ve already lost, and third prize is you’re fired. There are many other sim­ilar scen­arios. If we want ac­cur­ate prices, we need traders to have lin­ear util­ity func­tions, or reas­on­able ap­prox­im­a­tion thereof.


This game sounds like a lot of fun, and seems to have lots of op­por­tun­it­ies for deep tac­tical and stra­tegic play, for bluff­ing, and to do things that play­ers should find fun. I really hope that it gets made. You can take one or more of many roles – ar­bit­rager, mys­tery solver, genre savvy lo­gi­cian, mo­mentum, value, tac­tical or stra­tegic, or just hang out and watch the fun and/​or the mys­tery, and if you later get a hunch, you can go for it.

I hope to talk to a few friends of mine who have small game com­pan­ies, in the hopes one of them can help. Kick­starter ho?

If any­one out there is in­ter­ested in the game and mak­ing it hap­pen, please do talk to Robin Han­son about it. I’m sure he’d be happy to help make it a real­ity. And if you’re look­ing to play, I en­cour­age you to give it a shot, and re­port back.