Can you explain the no-loss competition idea further?
If you have to stake your USDC, isn't this still locking up USDC, the thing you were trying to avoid doing?
No, not really. In fact, staking USDC (i.e., lending it to other people, or providing liquidity between coins) seems decently profitable right now. As with everything, there are riskier and less risky ways to go about it, and for this prediction market setup, I'd choose one of the less risky ones.
So normally, when you make a bet in, say, Polymarket, the money which you stake is kept by a contract until the question is resolved. But it's not yielding anything, it's just sitting there. And making it yield in the meantime a) is more profitable, and b) solves a problem of not being able to bet on long-term things, because now you're resistant to inflation+you win more money as time passes. I think that previously, some individuals (Caplan?) used to bet US stocks instead of cash for that reason, but I can't find a reference.
So to answer your question,
Also its maybe worth noting that the idea is not unique to Hedgehog markets/its been in the water supply for a while, it's just that Hedgehog markets might be the first to get to a working implementation.
What gives the game tokens value?
Right now, nothing; they are not even on the main blockchain yet (they'll launch in a few months) Eventually, they could use USDC, or some other stablecoin, and those would have value.
From reading further through the Hedgehog Markets link:
With regards to locking up USDC: I've only just started reading up on Ethereum (e.g. this post), but from my very rudimentary understanding, I suppose the point here is that USDC is a stablecoin pegged to the price of 1 USD, so locking up USDC does not expose you to the same volatility as would happen if you locked up the equivalent amount of ETH instead.
Thanks for writing this! I got lots of food for thought.
With regards to r/calledit, I looked through the top 30+ posts, but I wasn't as impressed.
I thought that the How I Met Your Mother prediction was impressive.
I think that survivorship bias, or more generally the accuracy rate could be quantified, i.e., just get 100 random posts and check whether they were true. It'd be a nice mini-project.
Highlights
Index
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Prediction Markets & Forecasting Platforms
Metaculus
SimonM (a) kindly curated the top comments from Metaculus this past July. They are (a):
Round 2 of the Keep Virginia Safe Tournament (a) will begin in early August. It'll focus on Delta and other variants of concern, access to and rollout of the vaccine, and the safe reopening of schools in the fall.
Charles Dillon—a Rethink Priorities volunteer—created a Metaculus series on Open Philanthropy's donation volumes (a). Charles also wrote an examination of Metaculus' resolved AI predictions and their implications for AI timelines (a), which tentatively finds that the Metaculus community expected slightly more progress than actually occurred.
Polymarket
Polymarket had several prominent cryptocurrency prediction markets. Will Cardano support smart contracts on Mainnet by October 1st, 2021? (a) called Cardano developers out on missed deadlines (a) (secondary source (a)).
Will EIP-1559 be implemented on the Ethereum mainnet before August 5, 2021? (a) saw Polymarket pros beat Ethereum enthusiasts by more accurately calculating block times. Lance, an expert predictor market player, covers the topic here (a).
Polymarket also started their first tournament, the first round of which is currently ongoing. 32 participants each received $100, and face-off in a sudden-death tournament (a). Participants' profits can be followed on PolymarketWhales (a).
Kalshi
Kalshi (a)—a CFTC (a)-regulated prediction market—has launched, and is now available to US citizens. Kalshi previously raised $30 million (a) in a round led by Sequoia Capital (a). Fees (a) are significantly higher than those of Polymarket.
Reddit
Reddit added some prediction functionality (a) late last year, and the NBA subreddit has recently been using it (a). See Incentivizing forecasting via social media (a) and Prediction markets for internet points? (a) for two posts which explore the general topic of predictions on social media platforms.
Also on Reddit, r/MarkMyWorlds (a) contains predictions which people want remembered, and r/calledit (a) contains those predictions which people surprisingly got right. Some highlights:
The predictions from r/MarkMyWords about public events could be tallied to obtain data on medium to long-term accuracy, and the correct predictions from r/calledit could be used to get a sense of how powerful human hypothesis generation is.
Hedgehog Markets
Hedgehog Markets Raises $3.5M in Seed Funding (a). They also give a preview (a) of their upcoming platform. I'm usually not a fan of announcements of an announcement, but in this case I thought it was worth mentioning:
The problem this solves is that within the DeFi ecosystem, the time value of money—the amount of interest one can earn from money by letting it sit idle, e.g., by lending it to other people or by lending liquidity to stable-coin pools—is fairly high. So once one is willing to get one's money into a blockchain, it's not clear that betting offers the best return on investment. But with Hedgehog Market's proposed functionality, one can get the returns on betting plus the interest rate of money at the same time.
In practice, the proposed design isn't quite right, because Hedgehog contests unnecessarily consist of more than one question, and because one can't also bet the principal. But in the long run, this proposal, or others like it, should make Polymarket worried that it will lose its #1 spot as the best crypto prediction market.
Odds and Ends
Biatob (a)—an acronym of "Betting is a Tax On Bullshit"—is a new site for embedding betting odds on one's writing. Like: I (bet: $20 at 50%) (a) that this newsletter will exceed 500 subscribers by the end of 2021. Here (a) is a LessWrong post introducing it.
Hypermind launches a new contest on the future of AI (a), with 30,000€ at stake for prizes. An interview with Jacob Steinhardt, a UC Berkeley professor who selected the questions, can be found here (a). Hypermind's website has also undergone a light redesign.
I've added Kalshi and Betfair to Metaforecast.
In the News
Unfortunately, Fabs Won’t Fix Forecasting (a) gives a brief overview of the state of the semiconductor manufacturing industry. The recent chips shortage has led to more fabrics being built to serve anticipated demand, and to tighter coordination between buyers and manufacturers. The article then makes a point that "...companies are looking for ways to mitigate shortages. Building fabs is part of the answer, but unless OEMs (original equipment manufacturers (a)) and the supply chain can improve the accuracy of their forecasts, the chip industry's next problem could be be overcapacity."
Malta is in trouble over betting & fraud: Malta faces EU sports betting veto withdrawal (a) & Malta first EU state placed on international money laundering watch-list (a). H/t Roman Hagelstein. From the first article:
The European Central Bank seems to systematically over-predict inflation (a).
Forecasting Swine Disease Outbreaks (a)
Blog Posts
Thinking fast, slow, and not at all: System 3 jumps the shark (a): Andrew Gelman tears into Kahneman's new book Noise; Kahneman answers in the comments.
Superforecasters look at the chances of a war over Taiwan (a) and at how long Kabul has left after America's withdrawal from Afghanistan (a).
In Shallow evaluations of longtermist organizations (a), I look at the pathways to impact for a number of prominent longtermist EA organizations, and I give some quantified estimates of their impact or of proxies of impact.
Global Guessing interviews Juan Cambeiro (a)—a superforecaster known for his prescient COVID-19 predictions—and goes over three forecasting questions with him. Forecasters who are just starting out might find the description of what steps Juan takes when making a forecast particularly valuable.
Types of specification problems in forecasting (a) categorizes said problems and suggests solutions. It's part of a broader set of forecasting-related posts by Rethink Priorities (a).
Risk Premiums vs Prediction Markets (a) explains how risk premiums might distort market forecasts. For example, if money is worth less when markets are doing well, and more when markets are doing worse, a fair 50:50 bet on a 50% outcome might have negative expected utility. The post is slightly technical.
Leaving the casino (a). "Probabilistic rationality was originally invented to choose optimal strategies in betting games. It’s perfect for that—and less perfect for other things."
16 types of useful predictions (a) is an old LessWrong post by Julia Galef, with some interesting discussion in the comments about how one can seem more or less accurate when comparing oneself to other people, depending on the method of comparison.
Long Content
The Complexity of Agreement (a) is a classical paper by Scott Aaronson which shows that the results of Aumann's agreement theorem hold in practice.
The blog post The Principle of Indifference & Bertrand’s Paradox (a) gives very clear examples of the problem of priors. It's a chapter from a free online textbook (a) on probability.
The infamous Literary Digest poll of 1936 (a) predicted that Roosevelt's rival would be the overwhelming winner. After Roosevelt instead overwhelmingly won, the magazine soon folded. Now, a new analysis finds that (a):
Proebsting's paradox (a) is an argument that appears to show that the Kelly criterion can lead to ruin. Its resolution requires understanding that "Kelly's criterion is to maximise expected rate of growth; only under restricted conditions does it correspond to maximising the log. One easy way to dismiss the paradox is to note that Kelly assumes that probabilities do not change."
Note to the future: All links are added automatically to the Internet Archive, using this tool (a). "(a)" for archived links was inspired by Milan Griffes (a), Andrew Zuckerman (a), and Alexey Guzey (a).