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There are other kinds of prediction systems that don't use markets. One researcher developed a system that just recruited a bunch of random people and took the
by Houshalter 9y ago
There are other kinds of prediction systems that don't use markets. One researcher developed a system that just recruited a bunch of random people and took the predictions of those with the best historical track record. And found it was much better than chance or predictions by CIA analysts with a lot more information and knowledge.
Others have found that markets can work almost as well with just play money. It's just a game with no real stakes, but the wisdom of crowds and competitive human nature still makes it work. It's much much harder to manipulate though, because you can't spend real money to buy predictions. You can only get play money by organically earning it over a long period of time making actually good predictions.
I don't think real prediction markets are as bad as you think though. Especially if all bets must be public. Then manipulation and conflicts of interest are easily detectable. And you can earn money by betting against them. People would quickly make bots that just bets against new accounts betting lots of money, or inverts the trades of people with historically worse than chance track records. People will develop meta models that make bets based on the trades of other predictors. And come up with crazy machine learning systems to detect manipulation.
If that somehow doesn't work, the best system might be a combination. E.g. have a group of predictors who make the final decision, but have access to the results of a prediction market. And can decide when to trust it and when not to.
Of course that shouldn't be necessary. Because if there is anyone that can tell better than chance when the market is wrong, they could just make tons of money betting on the market itself. And in the process correct the error.
- meredydd 9y agoThe Good Judgement Project (for that was its name) is pretty awesome - but if you mechanically connected it to the policy apparatus, I'd expect Mr Goodhart on the next train. You've proposed a few possible countermeasures (play money, publication of bets, a guess at the equilibrium outcome of a vastly complex HFT game). Each of these might work, but (a) isn't actually what Robin Hanson is proposing (b) hasn't been tested as a defence against highly motivated adversarial actors. And they would be motivated. The threat model here is "manipulate this market and directly influence policy in your favour". They say "money in politics is like water - it finds all the cracks", and politics at least has humans in the loop. The track record of people betting against it is...not promising.
- Houshalter 9y agoPlease show me how any of the ideas I've proposed can be exploited. I guess in theory all the people involved could be bribed - but that's already true in our current system! At least this distributes the process over many more people and vastly increases the number of people you need to bribe. Let's try something and see what happens. It doesn't need to start with the government, even private businesses implementing these systems would be a great test bed. Then we can work out the flaws, if there are any. The potential benefits of improving our prediction making ability is enormous. This is a problem that, in an ideal world, our society would be devoting tons of resources to solve. The status quo sucks and we shouldn't just give up and accept it.
- XFrequentist 9y agomeredydd's specifically voicing concern with decision markets, not prediction markets. Hanson's Futarchy paper outlines the difference (alas, wikipedia unhelpfully treats them as synonyms). Hanson's "Adventure 1" is quite a bit more specific than "improving our prediction making ability" (which of course could unlock tremendous value).