What public prediction markets exist in the world today? Have you used one recently?

What attributes do they have that should make us trust them or not, such as liquidity and transaction costs? Do they distort the tails? Which are usable by Americans?

This post is just a request for information. I don’t have much to say.

Intrade used to be the dominant market, but it is gone, opening up this question. The most popular question on prediction markets has been the US Presidential election. If a prediction market wants to get off the ground, it should start with this question. Since the campaign is gearing up, markets that hope to fill the vacuum should exist right now, hence this post.

Many sports bookies give odds on the election. Bookmakers are not technically prediction markets, but they are awfully close and I think the difference is not so important, though maybe they are less likely to provide historical data. They may well be the most liquid and accurate sources of odds. But the fact that they concentrate on sports is important. It means that they are less likely to expand into other forms of prediction and less likely to be available to Americans. I suspect that there are too many covering the election for an exhaustive list to be interesting, but feel free point to point out interesting ones, such as the most liquid, most accessible to Americans, or with the most extensive coverage of non-sports events.

Betting is illegal in America. This is rarely enforced directly against individuals, but often creates difficulty depositing money or using the sites. I don’t think that they usually run into problems if they avoid sports and finance. In particular, Intrade was spun off of a sports bookie specifically to reach Americans.

Here are a few comments on Wikipedia’s list. It seems to be using a strict market criterion, so it includes two sports sites just because they are structured as markets. Worse, it might exclude bookies that I would like to know about. Not counting cryptocurrency markets (which I would like to hear about), it appears that there are no serious money prediction markets. The closest is New Zealand-based iPredict, which is limited to a total deposit of US$6000, and it takes a 18 months to build up to that. The venerable Iowa Electronic Markets (restricted to federal elections) and the young NZ PredictIt have even smaller limits, in return for explicit legality in America. It includes two play money markets: Microsoft and Hypermind. Finally, it mentions the defunct play-money Scicast, most notable for its different topic: science and technology. Hypermind and Scicast came out of the IARPA contest. Not on the list, I should mention PredictionBook, which is close to being a play-money prediction market, but tuned in different directions, both in terms of the feedback it provides to participants and the way it encourages a proliferation of questions.

Update: In the previous paragraph, I discarded two sports bookies from Wikipedia's list. I did so because I thought that they had very little non-sports offerings, but in both cases I did a poor job of navigating them and underestimated the numbers. Smarkets still seems too small to be interesting, but Betfair does have solid political offerings and is rightfully at the top of the list.

As of March 2016 my recommendations are:

• Betfair (see also) is the best real market.
• PredictIt is open to Americans
• Metaculus is a play money market
• Good Judgment Project (Tetlock) is another
• PredictionBook is useful for complementary purposes, such as recording one's predictions, especially ones that do not correspond to questions on other sites. It is not so useful for integrating other people's predictions or scoring accuracy.

From their website:

PredictIt is an exciting new, real money site that tests your knowledge of political and financial events by letting you make and trade predictions on the future.

Taking part in PredictIt is simple and easy. Pick an event you know something about and see what other traders believe is the likelihood it will happen. Do you think they have it right? Or do you think you have the knowledge to beat the wisdom of the crowd?

The key to success at PredictIt is timing. Make your predictions when most people disagree with you and the price is low. When it turns out that your view may be right, the value of your predictions will rise. You’ll need to choose the best time to sell!

Keep in mind that, although the stakes are limited, PredictIt involves real money so the consequences of being wrong can be painful. Of course, winning can also be extra sweet.

For detailed instructions on participating in PredictIt, How It Works.

PredictIt is an educational purpose project of Victoria University, Wellington of New Zealand, a not-for-profit university, with support provided by Aristotle International, Inc., a U.S. provider of processing and verification services. Prediction markets, like this one, are attracting a lot of academic and practical interest (see our Research section). So, you get to challenge yourself and also help the experts better understand the wisdom of the crowd.

Betting on the future is a good way to reveal true beliefs.

As one example of such a bet on a key debate about a post-human future, I'd like to announce here that Robin Hanson and I have made the following agreement. (See also Robin's post at Overcoming Bias):

It's a bet on the old question: ems vs. de novo AGI. Kurzweil and Kapor bet on another well-known debate: Will machines pass the Turing Test. It would be interesting to list some other key debates that we could bet on. 

But it's hard to make a bet when settling the bet may occur in extreme conditions:

• after human extinction,
• in an extreme utopia,
• in an extreme dystopia or,
• after the bettors' minds have been manipulated in ways that redefine their personhood: copied thousands of times, merged with other minds, etc.

MIRI has a "techno-volatile" world-view: We're not just optimistic or pessimistic about the impact of technology on our future. Instead, we predict that technology will have an extreme impact, good or bad, on the future of humanity. In these extreme futures, the fundamental components of a bet--the bettors and the payment currency--may be missing or altered beyond recognition.

So, how can we calibrate our probability estimates about extreme events? One way is by betting on how people will bet in the future when they are closer to the events, on the assumption that they'll know better than we do. Though this is  an indirect and imperfect method, it might be the best we have for calibrating our beliefs about extreme futures.

For example, Robin Hanson has suggested a market on tickets to a survival shelter as a way of betting on an apocalypse. However, this only relevant for futures where shelters can help; and where there is time to get to one while the ticket holder is alive, and while the social norm of honoring tickets still applies.

We could also define bets on the progress of MIRI and similar organizations. Looking back on the years since 2005, when I started tracking this, I would have liked to bet on, or at least discuss, certain milestones before they happened. They served as (albeit weak) arguments from authority or from social proof for the validity of MIRI's ideas. Some examples of milestones that have already been reached:

• SIAI's budget passing $500K per annum
• SIAI getting 4 full-time-equivalent employees
• SIAI publishing its fourth peer-reviewed paper
• The establishment of a university research center in relevant fields
• The first lecture on the core FAI thesis in an accredited university course
• The first article on the core FAI thesis in a popular science magazine
• The first mention of the core FAI thesis (or of SIAI as an organization) in various types of mainstream media, with a focus on the most prestigious (NPR for radio, New York Times for newspapers).
• The first (indirect/direct) government funding for SIAI

Looking to the future, we can bet on some other FAI milestones. For example, we could bet on these coming true by a certain year.

• FAI research in general (or: organization X) will have Y dollars in funding per annum (or: Z full-time researchers).
• Eliezer Yudkowsky will still be working on FAI.
• The intelligence explosion will be discussed on the floor of Congress (or: in some parliament; or: by a head of state somewhere in the world).
• The first academic monograph on the core FAI thesis will be published (apparently that will be Nick Bostrom's).
• The first master's thesis/PhD dissertation on the core FAI thesis will be completed.
• "Bill Gates will read at least one of 'Our Final Invention' or 'Superintelligence' in the next 2 years" (This already appears on PredictionBazaar.)

(Some of these will need more refinement before we can bet on them.)

Another approach is to bet on technology trends: brain scanning resolution; prices for computing power; etc. But these bets are about a Kurzweillian Law of Accelerating Returns, which may be quite distinct from the Intelligence Explosion and other extreme futures we are interested in.

Many bets only make sense if you believe that a soft takeoff is likely. If you believe that, you could bet on AI events while still allowing the bettors a few years to enjoy their winnings. 

You can make a bet on hard vs. soft takeoff simply by setting your discount rate. If you're 20 years old and think that the economy as we know it will end instantly in, for example, 2040, then you won't save for your retirement. (See my article at H+Magazine.) But such decisions don't pin down your beliefs very precisely: Most people who don't save for their retirement are simply being improvident. Not saving makes sense if the human race is about to go extinct, but also if we are going to enter an extreme utopia or dystopia where your savings have no meaning. Likewise, most people save for retirement simply out of old-fashioned prudence, but you might build up your wealth in order to enjoy it pre-Singularity, or in order to take it with you to a post-Singularity world in which "old money" is still valuable.

I'd like to get your opinion: What are the best bets we can use for calibrating our beliefs about the extreme events we are interested in? Can you suggest some more of these indirect markers, or a different way of betting?

Overcoming Bias: Was Intrade being manipulated in the last month?

The link is good apropos, but the question that interests me is a bit more general. It seems to me that the apparent failure of Intrade to function as a predictor/knowledge aggregator before the US presidential elections was an important natural experiment. What do you think about the explanations and implications? I don't think it's too hard to discuss the knowledge aggregation issues without being bogged down in the specificities of US politics.

For some time now I've traded on Intrade after some successes on the IEM. Recently, Intrade announced a new fee structure - instead of paying a few cents per trade, one has free trading but your account is charged $5 every month or $60 a year (see also the forum announcement).

Initially, this didn't seem so bad to me, but then I compared the annual cost of this fee to my trading stake, ~$200. I would have to earn a return of 30% just to cover the fee! (This is also pointed out by many in the forum thread above.)

I don't trade very often since I think I'm best at spotting mispricings over the long-term (the CA Proposition 19 contract (WP) being a case in point; despite being ultimately correct, I could have been mauled by some of the spikes if I had tried only short-term trades). If this fee had been in place since I joined, I would be down by $30 or $40.

I'm confident that I can earn a good return like 10 or 20%, but I can't do >30% without taking tremendous risks and wiping myself out. So this new fee structure means that I am basically going to do a little trading in January, since I've already been charged the first $5, and then will cash out at the end.

And more generally, assuming that this isn't raiding accounts* as a prelude to shutting down (as a number of forumers claim), Intrade is no longer useful for LessWrongers as it is heavily penalizing small long-term bets like the ones we are usually concerned with - bets intended to be educational or informative. It may be time to investigate other prediction markets like Betfair, or just resign ourselves to non-monetary/play-money sites like PredictionBook.com.

* When I submitted my withdrawal request for my balance, I received an email offering to instead set my account to 'inactive' status such that I could not trade but would not be charged the fee; if I wanted to trade, I would simply be charged that month's $5. I declined the offer, but I couldn't help wonder - why didn't they simply set all accounts to 'inactive' and then let people opt in to the new fee structure? Or at least set 'inactive' all accounts which have not engaged in any transactions within X months?