Hi Zvi - Austin from Manifold here. Thanks for linking to us, even if you think we're "a mess"! Do you mind expanding on that (we're always interested in feedback!) My guesses are that you're talking about the fact that we're play money atm, or perhaps our dynamic parimutuel market making mechanism.
Also: I'd be interested in setting up Manifold markets for all 41 of these questions, especially if at some later date you plan on posting your judgement of the resolution (as you and Scott already do for yearly calibrations and Covid posts).
Finally: "multiple binary markets with different date thresholds" is one simple way to make these work as full-fledged markets, but it feels like it might be a lot of overhead for a trader to bet on... Plus it'd spread the liquidity even thinner; just 3 different dates (eg 1mo, 3mo, 6mo) would lead to 120 markets.
One improvement might be to use multi-category exclusive buckets (e.g. 0-1mo, 1-3mo, 3-6mo, 6+mo) on a single market for each question. I'm wondering if anyone has an incentive-compatible market design that lets people simply post their true prediction about a date and get paid out according to how correct they were?
Well two things. Yes, the play money thing is an issue, but more than that, it's also a matter of organization and trust - I need to have a clean way to find the things I want in good form and so on, better forms of curation.
I am giving non-zero consideration to doing the setting up myself and the barrier here is the amount of work involved including the commitment to figure out resolution. We could have a call today to discuss and maybe figure something out. I'd be happy I think to serve as arbiter if I had a bunch of other supports in place.
Every time I think about using MM I get an ugg field around it but that does not mean it should not be tried.
Some of these markets are on Futuur….but then Futuur is a hot mess right now for real money markets. They use an AMM, with liquidity of around 100$ per market, so you can IMHO never make more than 100$ on any bet. This means that it’s nearly impossible to make any significant profit (if you value your time) and all you can do is pick up some 10-ish bucks per market (even for very misprized ones). As a result, markets are ridiculously misprized all the time and the forecasts it provides are very useless.
But then, Polymarket also shows that this isn’t an easy business to run profitably: Polymarket is AFAIK generating exactly 0 revenue, despite spending probably a lot on development (made worse by everything being implemented on a blockchain), paying the gas for all the trades (it’s on polygon, so not super expensive per transaction….still gonna add up) and now also subsidizing liquidity and trading (since the AMM makes providing liquidity risky but unrewarding, subsidizing it is probably a good idea….but also costs money).
Add to that the fact that trading is a zero-sum game……not sure how to best do this sustainably. Should we just see prediction markets as (subsidize-worthy) public goods?
There are people (and I would include myself in this) who value the existence of such markets enough to subsidize them. There are also people who would use them to 'hedge' various things in various ways, an people who like to gamble. You can also run ads, you can make money through business partnerships, through becoming a cultural touchstone, etc. I do think that if legal issues were dealt with, there would be profitable business available.
If there was sufficient interest, for example, I think that FTX's Future Fund would seriously consider providing large subsidies for many questions. Scott Sumner raised a bunch of money to subsidize NGDP futures markets. And so on.
Polymarket is in fact making money, in the sense that it has high enterprise value well in excess of its funds spent. So others think there's value there!
I don't see how you can have a useful market on global nuclear war or something with a sufficiently high probability of leading to it. The correct choice is always to bet that it won't happen: if it doesn't, you collect your money, and if it does, your counterparties have been vaporized and can't pay.
Hi Zvi - Austin from Manifold here. Thanks for linking to us, even if you think we're "a mess"! Do you mind expanding on that (we're always interested in feedback!) My guesses are that you're talking about the fact that we're play money atm, or perhaps our dynamic parimutuel market making mechanism.
Also: I'd be interested in setting up Manifold markets for all 41 of these questions, especially if at some later date you plan on posting your judgement of the resolution (as you and Scott already do for yearly calibrations and Covid posts).
Finally: "multiple binary markets with different date thresholds" is one simple way to make these work as full-fledged markets, but it feels like it might be a lot of overhead for a trader to bet on... Plus it'd spread the liquidity even thinner; just 3 different dates (eg 1mo, 3mo, 6mo) would lead to 120 markets.
One improvement might be to use multi-category exclusive buckets (e.g. 0-1mo, 1-3mo, 3-6mo, 6+mo) on a single market for each question. I'm wondering if anyone has an incentive-compatible market design that lets people simply post their true prediction about a date and get paid out according to how correct they were?
Well two things. Yes, the play money thing is an issue, but more than that, it's also a matter of organization and trust - I need to have a clean way to find the things I want in good form and so on, better forms of curation.
I am giving non-zero consideration to doing the setting up myself and the barrier here is the amount of work involved including the commitment to figure out resolution. We could have a call today to discuss and maybe figure something out. I'd be happy I think to serve as arbiter if I had a bunch of other supports in place.
Every time I think about using MM I get an ugg field around it but that does not mean it should not be tried.
Some of these markets are on Futuur….but then Futuur is a hot mess right now for real money markets. They use an AMM, with liquidity of around 100$ per market, so you can IMHO never make more than 100$ on any bet. This means that it’s nearly impossible to make any significant profit (if you value your time) and all you can do is pick up some 10-ish bucks per market (even for very misprized ones). As a result, markets are ridiculously misprized all the time and the forecasts it provides are very useless.
But then, Polymarket also shows that this isn’t an easy business to run profitably: Polymarket is AFAIK generating exactly 0 revenue, despite spending probably a lot on development (made worse by everything being implemented on a blockchain), paying the gas for all the trades (it’s on polygon, so not super expensive per transaction….still gonna add up) and now also subsidizing liquidity and trading (since the AMM makes providing liquidity risky but unrewarding, subsidizing it is probably a good idea….but also costs money).
Add to that the fact that trading is a zero-sum game……not sure how to best do this sustainably. Should we just see prediction markets as (subsidize-worthy) public goods?
There are people (and I would include myself in this) who value the existence of such markets enough to subsidize them. There are also people who would use them to 'hedge' various things in various ways, an people who like to gamble. You can also run ads, you can make money through business partnerships, through becoming a cultural touchstone, etc. I do think that if legal issues were dealt with, there would be profitable business available.
If there was sufficient interest, for example, I think that FTX's Future Fund would seriously consider providing large subsidies for many questions. Scott Sumner raised a bunch of money to subsidize NGDP futures markets. And so on.
Polymarket is in fact making money, in the sense that it has high enterprise value well in excess of its funds spent. So others think there's value there!
I don't see how you can have a useful market on global nuclear war or something with a sufficiently high probability of leading to it. The correct choice is always to bet that it won't happen: if it doesn't, you collect your money, and if it does, your counterparties have been vaporized and can't pay.