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This doesn't use real money? Just worthless "points"? If it doesn't use real money the predictions will be garbage. "Why do you have to use real money?" Pred

This doesn't use real money? Just worthless "points"? If it doesn't use real money the predictions will be garbage. "Why do you have to use real money?" Prediction markets work best when players have some stake, however small, in the outcome. With play money, many players take risks they wouldn’t otherwise take or don’t attend to their holdings as carefully. Such markets may therefore have less research value than real money ones. Besides, we think real money is fun too. https://www.predictit.org/support/faq https://www.predictit.org/support/faq

chillacy 6y ago
It seems to use reputation instead, which might do decently with those who take it seriously. For example, the Good Judgement Project forecasting competition uses points and scores to incentivize: https://www.gjopen.com/faq https://www.gjopen.com/faq https://en.wikipedia.org/wiki/The_Good_Judgment_Project https://en.wikipedia.org/wiki/The_Good_Judgment_Project > Predictions are scored using Brier scores.[6] The top forecasters in GJP are "reportedly 30% better than intelligence officers with access to actual classified information
- nl 6y ago
  This is true, but GJP explicitly isn't a prediction market. Instead it's a specific way to make predictions. You can't bet more of your points in GJP if you are really sure about an answer, hence it isn't a prediction market.
  - chillacy 6y ago
    Yea it’s a forecasting competition but it does seem related in the way that if you were to take things seriously, step one would be to estimate the odds, step two is to buy the position that’s underpriced.
gpm 6y ago
Presuming that you have to invest points and can't go too far in debt, it means people with a better track record at predicting have more weight to their predictions. Long term it seems like this selects for participants who are correctly attempting to weigh the options, and are good at it.
- Nbox9 6y ago
  There seems to be a maximum amount of points any one person can invest in a prediction right now. There is a cap of a 10 share stake in any single prediction and a cap of 99 points per any share. This cap will prevent power players from placing too much weight on predictions.
  - bananaface 6y ago
    Wait what? That ruins the ability of anyone successful to weight their predictions based on confidence (they'll just fully weight everything). Will be interesting to see how this one plays out. I wonder what effect that will have on the market, it makes it much closer to a democracy than a betting market.
SheinhardtWigCo 6y ago
What about Stack Overflow, Quora, etc?
- tantalor 6y ago
  Points on those site are meaningless.
smnrchrds 6y ago
Would it be legal to use real money for this type of betting in the US?
- sushid 6y ago
  It’s legal for PredictIt. If FB could get some academic researchers on board I could see it happening but I guess it was more of a headache than what they wanted.
darawk 6y ago
Points will work fine. The reason money works is partly the SKITG effect, but not entirely. In an iterated prediction market game, eventually reputation will accrue to those that make accurate forecasts. Much in the same way that money accrues to those skilled in business, or at forecasting in traditional financial markets. This iterated equilibrium should result in high quality predictions after a relatively short period of calibration.
- bananaface 6y ago
  I'm not convinced. If there's no direct profit, I can't imagine talented people are going to waste that much time on it. Reputation is also not that great of a proxy, since you can game it. E.g. by using strategies that push all the risk into the tails. If it's money, you have a much stronger incentive to cover your ass against rare but disastrous blowups, since your entire livelihood is at stake (rather than just your ability to play the local game). If you're just trying to look good on Facebook... The risk/reward is different.
  - darawk 6y ago
    > I'm not convinced. If there's no direct profit, I can't imagine talented people are going to waste that much time on it. Wikipedia, reddit, HN, and stackoverflow would beg to differ. Reputation drives people to expend incredible amounts of effort. In 2002 I would have had the same intuition you do. But i've seen reputation systems and social credit build too many incredible things to feel that way anymore. > Reputation is also not that great of a proxy, it encourages strategies which push the risks into the tails. If it's money, you have a much stronger incentive to reduce your own tail risk since your entire livelihood is at stake, rather than just your ability to play the local game. I do think there's a reasonable argument that the risk curves will be different, but I don't really see how that cashes out in an inaccurate overall system. It seems to me that as long as reputation gets allocated to those who are consistently correct, the system should work pretty well.
    - bananaface 6y ago
      There is no StackOverflow for trading, or betting. Nobody gives away their edge for free, although they may give away their trades. >I don't really see how that cashes out in an inaccurate overall system Imagine a strategy that has a 50% chance of blowing you up completely over 10 years, but nets you 50% more profit if it works. The average return of this strategy is 25% less than a safe strategy (zero risk, zero gain), but it has a 50% chance of winning in this marketplace. If it were real money, nobody would go near it. Ok, now imagine there's 100 people running strategies with that profile and 100 running the safe strategy. All of the top spots will be held by the suicidal strategy. This is an artificial example but you get the point. Real money forces you to avoid that risk profile as soon as you identify it.
ketamine__ 6y ago
I've been using poly.market. Their upcoming upgrade won't have fees (allegedly). Right now it's expensive to place trades because it uses transactions on Ethereum.
learnstats2 6y ago
People value money differently - so any prediction market with real money is just a play money market for rich people. That doesn't give it better predictive powers - and maybe the opposite. Uprating people with a historical record of accuracy is likely to be at least better than wealth as a marker.
- tantalor 6y ago
  That can be fixed by capping wagers across the site, leveling the playing field.
- amelius 6y ago
  Can't this be fixed by allowing anybody to predict at most once? I mean, rich people are only a fraction of the total.
purple-again 6y ago
Like the difference between playing poker with a table full of serious guys who want to win and playing poker "for fun" and no stakes with a group of friends half of which have never even played poker. Night and day experiences.

chillacy 6y ago

It seems to use reputation instead, which might do decently with those who take it seriously. For example, the Good Judgement Project forecasting competition uses points and scores to incentivize: https://www.gjopen.com/faq https://www.gjopen.com/faq https://en.wikipedia.org/wiki/The_Good_Judgment_Project https://en.wikipedia.org/wiki/The_Good_Judgment_Project > Predictions are scored using Brier scores.[6] The top forecasters in GJP are "reportedly 30% better than intelligence officers with access to actual classified information

nl 6y ago
This is true, but GJP explicitly isn't a prediction market. Instead it's a specific way to make predictions. You can't bet more of your points in GJP if you are really sure about an answer, hence it isn't a prediction market.
- chillacy 6y ago
  Yea it’s a forecasting competition but it does seem related in the way that if you were to take things seriously, step one would be to estimate the odds, step two is to buy the position that’s underpriced.

gpm 6y ago

Presuming that you have to invest points and can't go too far in debt, it means people with a better track record at predicting have more weight to their predictions. Long term it seems like this selects for participants who are correctly attempting to weigh the options, and are good at it.

Nbox9 6y ago
There seems to be a maximum amount of points any one person can invest in a prediction right now. There is a cap of a 10 share stake in any single prediction and a cap of 99 points per any share. This cap will prevent power players from placing too much weight on predictions.
- bananaface 6y ago
  Wait what? That ruins the ability of anyone successful to weight their predictions based on confidence (they'll just fully weight everything). Will be interesting to see how this one plays out. I wonder what effect that will have on the market, it makes it much closer to a democracy than a betting market.

SheinhardtWigCo 6y ago

What about Stack Overflow, Quora, etc?

tantalor 6y ago
Points on those site are meaningless.

smnrchrds 6y ago

Would it be legal to use real money for this type of betting in the US?

sushid 6y ago
It’s legal for PredictIt. If FB could get some academic researchers on board I could see it happening but I guess it was more of a headache than what they wanted.

darawk 6y ago

Points will work fine. The reason money works is partly the SKITG effect, but not entirely. In an iterated prediction market game, eventually reputation will accrue to those that make accurate forecasts. Much in the same way that money accrues to those skilled in business, or at forecasting in traditional financial markets. This iterated equilibrium should result in high quality predictions after a relatively short period of calibration.

bananaface 6y ago
I'm not convinced. If there's no direct profit, I can't imagine talented people are going to waste that much time on it. Reputation is also not that great of a proxy, since you can game it. E.g. by using strategies that push all the risk into the tails. If it's money, you have a much stronger incentive to cover your ass against rare but disastrous blowups, since your entire livelihood is at stake (rather than just your ability to play the local game). If you're just trying to look good on Facebook... The risk/reward is different.
- darawk 6y ago
  > I'm not convinced. If there's no direct profit, I can't imagine talented people are going to waste that much time on it. Wikipedia, reddit, HN, and stackoverflow would beg to differ. Reputation drives people to expend incredible amounts of effort. In 2002 I would have had the same intuition you do. But i've seen reputation systems and social credit build too many incredible things to feel that way anymore. > Reputation is also not that great of a proxy, it encourages strategies which push the risks into the tails. If it's money, you have a much stronger incentive to reduce your own tail risk since your entire livelihood is at stake, rather than just your ability to play the local game. I do think there's a reasonable argument that the risk curves will be different, but I don't really see how that cashes out in an inaccurate overall system. It seems to me that as long as reputation gets allocated to those who are consistently correct, the system should work pretty well.
  - bananaface 6y ago
    There is no StackOverflow for trading, or betting. Nobody gives away their edge for free, although they may give away their trades. >I don't really see how that cashes out in an inaccurate overall system Imagine a strategy that has a 50% chance of blowing you up completely over 10 years, but nets you 50% more profit if it works. The average return of this strategy is 25% less than a safe strategy (zero risk, zero gain), but it has a 50% chance of winning in this marketplace. If it were real money, nobody would go near it. Ok, now imagine there's 100 people running strategies with that profile and 100 running the safe strategy. All of the top spots will be held by the suicidal strategy. This is an artificial example but you get the point. Real money forces you to avoid that risk profile as soon as you identify it.

ketamine__ 6y ago

I've been using poly.market. Their upcoming upgrade won't have fees (allegedly). Right now it's expensive to place trades because it uses transactions on Ethereum.

learnstats2 6y ago

People value money differently - so any prediction market with real money is just a play money market for rich people. That doesn't give it better predictive powers - and maybe the opposite. Uprating people with a historical record of accuracy is likely to be at least better than wealth as a marker.

tantalor 6y ago
That can be fixed by capping wagers across the site, leveling the playing field.
amelius 6y ago
Can't this be fixed by allowing anybody to predict at most once? I mean, rich people are only a fraction of the total.

purple-again 6y ago

Like the difference between playing poker with a table full of serious guys who want to win and playing poker "for fun" and no stakes with a group of friends half of which have never even played poker. Night and day experiences.