does this affect incentive to provide reasoning? eg right now I might buy, then explain, in the hope that other people will believe me, also buy, and I can sell high (and if my claims were truthful and predictive, then this doesn’t screw them).
if trades are public like manifold right now, this might result in trading strategies like “mimic the most successful traders” becoming plausible. if I know a list of predictors who are reliably accurate, and I know whose offers are whose before the trade goes through, I can make the same curve of buys or asks they do. I haven’t worked this out carefully but I think I’d need to match the entire market on the other side in order to keep from moving the price by doing this, but it should be possible to do this in a way that doesn’t affect final price, and takes the same action as someone else. Which, from a prediction standpoint, could be very good, if I know one person has domain knowledge.
On the flipside, if bid/ask sequencing information isn’t available, this might obscure fine-grained detail about who was correct first? not sure about that.
right now I might buy, then explain, in the hope that other people will believe me, also buy, and I can sell high
I think this would still work, as long you don’t explain before your buy order goes through 🙃
if trades are public like manifold right now, this might result in trading strategies like “mimic the most successful traders” becoming plausible
I think this is right, because you could copy a successful trader in the same transaction they are buying in, so they would lose their first mover advantage (previously people could copy, but only after they picked up shares at the best price). This would be a good reason to not have individual orders public, at least before a batch trade goes through.
Interestingly real stock markets don’t have public orders for call auctions, they report an Indicative Match Price, and some kind of aggregated information about buy/sell imbalance (details vary). Whereas for continuous trading orders are public. Presumably this is for a similar reason.
It would maybe create a bit of a free-rider problem, if you had a situation where valuable data could be acquired at a cost (by doing a survey or experiment, or having fast messengers to run to London from Waterloo), then you kind of get exploited by anyone who just copies you.
On the other hand, in the immediate (non-equilibrium) mode the “copy the best trader” strategy is helping the market make good predictions. If their really is someone out there who is making perfect predictions, then having a lot of money follow their lead is going to result in better predictions.
as long you don’t explain before your buy order goes through
might even make sense to build this into the UI. noob-facing flavortext might be like “After-Trade Comment: make a comment that only becomes public after your order goes through, to explain your reasoning once you’ve bet on it? if you’re honest and correct, and others know that, others might match your bet, allowing you to sell early if you’d like to de-risk”
realizing that there’s still incentive for timeliness that might be awkward. it’s still the case that the person who trades last has the best position to update off whatever information the order book provides. This might cause people to put fake orders in and change them last-minute. possibly avoidable by, eg, limiting how often you can change your order; perhaps for a 1 day call auction, you can’t change your order more often than an hour after you placed it? perhaps this only makes sense for a limited period before the end of the call auction, eg if you have an order in the book 2 hours before it closes, you can’t change that order. that limits the time period where someone has to come back to check if someone did a fakeout.
alternately, just don’t provide any information from the unclosed call auction whatsoever; the price updates once a day, and you get no further information.
does this affect incentive to provide reasoning? eg right now I might buy, then explain, in the hope that other people will believe me, also buy, and I can sell high (and if my claims were truthful and predictive, then this doesn’t screw them).
if trades are public like manifold right now, this might result in trading strategies like “mimic the most successful traders” becoming plausible. if I know a list of predictors who are reliably accurate, and I know whose offers are whose before the trade goes through, I can make the same curve of buys or asks they do. I haven’t worked this out carefully but I think I’d need to match the entire market on the other side in order to keep from moving the price by doing this, but it should be possible to do this in a way that doesn’t affect final price, and takes the same action as someone else. Which, from a prediction standpoint, could be very good, if I know one person has domain knowledge.
On the flipside, if bid/ask sequencing information isn’t available, this might obscure fine-grained detail about who was correct first? not sure about that.
I think this would still work, as long you don’t explain before your buy order goes through 🙃
I think this is right, because you could copy a successful trader in the same transaction they are buying in, so they would lose their first mover advantage (previously people could copy, but only after they picked up shares at the best price). This would be a good reason to not have individual orders public, at least before a batch trade goes through.
Interestingly real stock markets don’t have public orders for call auctions, they report an Indicative Match Price, and some kind of aggregated information about buy/sell imbalance (details vary). Whereas for continuous trading orders are public. Presumably this is for a similar reason.
It would maybe create a bit of a free-rider problem, if you had a situation where valuable data could be acquired at a cost (by doing a survey or experiment, or having fast messengers to run to London from Waterloo), then you kind of get exploited by anyone who just copies you.
On the other hand, in the immediate (non-equilibrium) mode the “copy the best trader” strategy is helping the market make good predictions. If their really is someone out there who is making perfect predictions, then having a lot of money follow their lead is going to result in better predictions.
might even make sense to build this into the UI. noob-facing flavortext might be like “After-Trade Comment: make a comment that only becomes public after your order goes through, to explain your reasoning once you’ve bet on it? if you’re honest and correct, and others know that, others might match your bet, allowing you to sell early if you’d like to de-risk”
realizing that there’s still incentive for timeliness that might be awkward. it’s still the case that the person who trades last has the best position to update off whatever information the order book provides. This might cause people to put fake orders in and change them last-minute. possibly avoidable by, eg, limiting how often you can change your order; perhaps for a 1 day call auction, you can’t change your order more often than an hour after you placed it? perhaps this only makes sense for a limited period before the end of the call auction, eg if you have an order in the book 2 hours before it closes, you can’t change that order. that limits the time period where someone has to come back to check if someone did a fakeout.
alternately, just don’t provide any information from the unclosed call auction whatsoever; the price updates once a day, and you get no further information.