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> instead of an absurd point estimate like "Michelle Obama has a 6.90% of winning the election" A probability distribution is defined over a set of outcomes. I
by Xcelerate 3y ago
> instead of an absurd point estimate like "Michelle Obama has a 6.90% of winning the election"
A probability distribution is defined over a set of outcomes. If “Michelle Obama winning” is one independent, categorical outcome, then there is one probability associated with that outcome.
> you'd get something like "the probability of Michelle Obama winning the election is between 7.0% and 0.01%"
Stacking another layer of probability on top of probability distributions still results in only one final distribution for prediction purposes.
I think maybe what you’re trying to capture is how your “confidence” about a prediction ties into the evaluation of the reward or penalty. This would just be modulated by adjusting how wide/uniform your probability distribution is and the amount that you bet, but perhaps the websites could add some tools to help people visualize this better.
- OscarCunningham 3y agoYes, I agree that in principle every person should have a probability for each event. But what does the market tell us about what our own belief should be? If you don't have any nonpublic information and you trust the market to be efficient then your assumption should be that you yourself cannot make an expected profit in the market. So the useful information from the market can be given in terms of the bounds within which you can't bet profitably. You yourself should update your probabilities to be within those bounds.