I thought that bit was very well-expressed. Let’s see if I can explain what I think I understood by it... If you’re buying and selling bets on a range of event

I thought that bit was very well-expressed. Let’s see if I can explain what I think I understood by it... If you’re buying and selling bets on a range of events, you can only be immune from arbitrage if all your bets are mutually consistent. For example, if you’re offering 3:1 odds on event X, you can’t offer more than 1:3 on the complementary event ~X (where exactly one of X and ~X must happen). That’s pretty obvious, but there a lot of much trickier variations. “Nate Silver has a probability model” just means his forecasts are derived from a self-consistent model about the probabilities of all the micro-events that make up the election. That fits with the information FiveThirtyEight have published about their methods, so it seems correct to me. One way Silver’s model could be invalid is if there’s just a bug, and a single event is tracked in multiple inconsistent ways. For example, if the model unknowingly projected odds for the same politician in both the presidential election and a senate seat, without accounting for the fact that you can’t win both at once. But if that’s the criticism Taleb is making, he should be able to put his finger on a specific bug, which he doesn’t seem to have done. Another way Silver could be wrong is if his models are far too volatile, so you know if the probabilities shoot up or down a long way they’ll almost certainly revert to the mean again. I imagine you could run arbitrage against that. It’s far from clear that that’s the case, though. It could be that his models are volatile but still pretty close to reality, in which case just betting against every big swing in Silver’s model would be like trying to make money by predicting day-today movement on the stock market.