There is no need for multiple settlement dates. If someone firmly believes the end-of-the-world event is going to occur on Apr. 1st. 2020, he should be ready to issue promissory notes to pay any amount on Apr. 2nd, in return for very small (no?) charge.

If someone firmly believes the end-of-the-world event is going to occur on Apr. 1st. 2020, he should be ready to issue promissory notes to pay any amount on Apr. 2nd, in return for very small (no?) charge. Probably not for no charge, since writing the notes takes some effort, and any rationalist will assign a nonzero (though possibly very small) probability to the apocalypse not occuring in time.

A possible problem with bets made over such long periods is that people who don't expect gold to become worthless in general by date X, but who do expect it to become worthless for them by date X, may also take the bet, skewing the results. A simple example would be an old hedonist, who strongly expects to die within a few years, doesn't care at all about what happens to his heirs, and would like some more money to spend while he is alive. Assuming that his prediction holds, by taking a bet that the apocalypse will happen by X, he gets some more money to spend while he is alive, and can then default on his debt by dying.

I'm afraid all the bets like this will just recover interest rates, which give the exchange rate between resources on one date and resources on another date. The interest rate combines both preferences to have stuff in some dates over others, and beliefs about whether people will actually have to make good on their promises to pay in the future. The problem is that it is very hard to disentangle these two effects.

A related problem to that envisioned by Sebastian is that a diehard believer in the apocalypse would likely be “judgment proof” in a legal sense. I think it’s fair to assume that anyone who believes that there will be no April 2nd, 20XX will also not plan to need assets on that date and will spend accordingly (perhaps they will give their remaining assets to their religion to curry last-minute goodwill or perhaps they will blow it in Vegas). As a result, the winner of the bet will not be able to collect from someone who has little to nothing left. Most modern societies’ lenient stances on bankruptcy will allow the loser to effectively start anew and not be required to pay the winner regardless of whether the loser goes on to make enough money later to satisfy their obligation. Asking the loser to put up collateral to protect against default would also defeat the purpose of the agreement; the person convinced of the apocalypse would then be deprived of some portion of the value of the payments they receive ahead of the purported doomsday. Like Robin indicated, the arrangement will have to be tweaked in a way that makes it function like an ordinary interest-driven exchange.

"Sebastian, the agreement would have to obligate the estate or descendants of a 50-year-old who wanted to bet on 2080. Again, the main objective is to let people put their money where their mouth is - let Kurzweil bet against Hofstadter's "more than 100 years to AI" pronouncement, even if the payoff is made by Kurzweil's estate to Hofstadter's estate (do they have kids)?"

Surely a bet obligating one's estate (beyond the reach of most of the incentive effects of near-term bets) won't add much value over this:

http://www.longbets.org/1

Eliezer, there are thick existing markets revealing short term interest rates. I would indeed be interested to create markets that more explicitly revealed very long term interest rates. But it would be hard to ensure that participants in such markets thought about any particular topic; they would think about whatever they thought was most relevant to estimating such prices.

I wanted to comment on your statement that there is an ethical issue with taking out a loan if you think the payment date is post-singularity. I strongly disagree. Do you believe that a bank that believed, due to proprietary interpretation of public data, we would soon enter a period of rapid deflation would disclose this to you when you signed up for your 7% 30 year fixed rate mortgage? Unless you have some sort of private data, such as an existing Singularity on your home pc just waiting to be unleashed, then you are just a person with a different opinion and have no obligation to disclose why you are choosing a certain payment date.

I will second Michael here, but will also ask why you would worry about having to pay back after a Friendly singularity. Surely the opportunity cost to you of needing to pay someone back post-singularity is so much greater than that pre-singularity that you can ignore the latter.

Vassar, I want the market to yield a time estimate of an apocalypse meta-event that includes Friendly singularities.

Eliezer: Both Douglas Hofstadter and Ray Kurzweil have two children (http://www.acm.org/crossroads/xrds10-2/hofstadter.html, http://sgouros.com/judy/reviews/hofstadter.html, http://money.cnn.com/magazines/fortune/fortune_archive/2007/05/14/100008848/).

"Markets for more than a few years into the future normally say that the best forecast is that conditions will stay the same and/or that existing trends will continue."

Judging from the crude oil data, futures markets tend to lag current prices; ie, if the current price was $20 a few days/weeks/months/years ago, the futures price will be $20 today. Markets have short-term memories; they think of "normal" as what conditions have been like for the past few years, and so if there's a deviation from "normal" (in either direction), people predict that the deviation will correct itself over time.

Peter McCluskey: I would say rather that markets more than a few years into the future normally say an incoherent and arbitrage filled mix of "things will stay the same" and "existing trends will continue". These are two very different but not generally mentally differentiated statements. In practice the time required to build a strong reputation as a money manager via long-term prediction is too great for the market to provide any selective pressure in favor of managers capable of closing such arbitrage opportunities.

I remember reading a (parody, I think) story a few years ago about a set up for Rapture-worried Christians to leave messages to their less devout loved ones, reassuring them after the Christians were raptured. Those in charge of passing on the message would guarrantee that they themselves would not be raptured by "blaspheming the holy spirit" or something of that nature. People have been trying to get some post-apocalypse deals for some time (someone even saught ways of ensuring that taboos over nuclear wastes would survive a civilization collapse). But the Christians above at least knew the nature of the Rapture; to get a sensible bet on the singularity, you´de have to know a lot more about the post-singularity world than is generally allowed. It sounds likely that gold will be valueless after the singularity - but we can construct scenarios, not TOOO unplausible sounding, that would end up in gold being increadibly valuble after a singularity. I feel it is ignorance not of the date, but of the nature of the singularity, that is the true barrier to sensible betting on it.

Michael, I don't understand what opportunities you're referring to that could qualify as arbitrage. Also, reputation isn't necessarily needed - there are many investors who would use their own money to exploit the relevant opportunities if there were good reason to think they could be identified, without needing to convince clients of anything. One of the reasons I don't try to exploit opportunities that I can imagine involving apocalypse in the 2020s is that I think it's unlikely that markets will see any new information in the next few years that would make those opportunities less profitable if I wait to try exploiting them.

I won't try to argue for particular opportunities here on OB. Suffice it to say that if markets price in a random mix of the assumption that things will stay the same and the assumption that trends will stay the same because participants don't distinguish between those two statements incoherence exists and arbitrage is possible.

(parody, I think) story

The story was for real. The site, I dunno, but it does accept money through paypal.

I think this procedure would be more likely to recover the chances of a personal disaster - rather than a global one.

I would borrow from my distant future self - offering to repay with interest later - but not because of a belief that the end of the world is imminent - but because of the chances that my future self would never have to repay the debt through personal catastrophes involving things like aging and dying. Since aging and dying are commonplace - while the end of the world is highly speculative - it seems likely that the former effects will dominate the signal - making it very difficult to say anything useful about the probability of the end of the world at particular points in time.

Surely there's a better way of predicting and preventing apocalypses than betting on them?

It's an interesting idea, to be sure; and I like the way it forces you to put your money where your mouth is. But the point of predicting existential risks is to avoid them, not try to make wealth off of them (especially since once the world ends, no matter what you're using to hold your wealth, it will still become worthless).

By the way, 2020 and 2030 are not implausible guesses for the point at which asteroid mining picks up and floods the market with shiny yellow rocks. I for one eagerly await, and plan to buy into asteroid mining ventures.