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> Even completely rational prediction markets generally have a structural problem with events with likelihoods close to 1.0 or 0.0. This leads to cases where co
by tqi 3y ago
> Even completely rational prediction markets generally have a structural problem with events with likelihoods close to 1.0 or 0.0. This leads to cases where conspiracy type events have much higher likelihoods than they should, leading people to assume the market has lost all rationality when actually it hasn't.
Is there academic research on this by any chance? Recently I've been wondering if there is a similar issue with VC funded of startups, where people overestimate the odds of a building 10B or 100B business (especially relative to a 1B or 100M business), causing them to pursue investments and strategies with lower expected value.
- alephnerd 3y ago> Is there academic research on this by any chance Read "Secrets of Sand Hill Road". It's written by Scott Kupor - one of the Managing Partner at A16Z - and explains in depth how the VC model works. It's also required reading if you want to interview at a VC fund, and highly recommended by other founders to learn how to better strategize when raising funds. Secrets of Sand Hill Road, Monetizing Innovation, and Working Backwards are the only books you need to successfully understand how to raise and build a VC funded startup. The pricing strategy guide by I think Sequoia is also useful.
- hipadev23 3y agoWorking Backwards, the Amazon book, or something else?
- alephnerd 3y agoYep. The Amazon book. The YC App is basically a modified PRFAQ. There's a reason why the PM-to-Founder pipeline exists.
- tqi 3y agoOh nice, thanks for the tips. I'm actually asking out of curiosity, born of working in and around SV companies over the last 10+ years, rather than anything practical.