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The anecdote of the Google executive is a lovely example of why the market failed to work as a predictions market. If you had a stake on Google executives conti

by kibwen 2y ago

The anecdote of the Google executive is a lovely example of why the market failed to work as a predictions market. If you had a stake on Google executives continuing to drag their feet on filling that position based on their past performance, and then they saw that prediction and were so incensed that they stopped dragging their feet, then you lost your stake!! The existence of the market changed the outcome; that's the whole point of the objection here! If you believe the purpose of such a market is to affect the real world in such a way, then sure, that's a reasonable stance... but that's not a market for making predictions, that's a distributed market for bidding on contracts.

benlivengood 2y ago
> that's a distributed market for bidding on contracts. Could $10,000 equivalent of the yearly prediction market awards have actually moved a Google executive-level job search if they were spent directly on that process? That's less than a month's salary for a sourcer, recruiter, and interviewer.
jjmarr 2y ago
Your objection assumes that there is an inherent value to accurate predictions, independent of being able to use those predictions to make decisions.
- lupire 2y ago
  Yes, that's what a "prediction market" is.
- ElevenLathe 2y ago
  The problem is that there is a misalignment of incentives. In this scenario, the execs wanted the hire done, so seeing the long odds on that happening motivated them to do the hire, and it got done and they were happy. But from the point of view of the bettors, they just lost their bet! The next time they make a bet, they will remember this and avoid betting on markets like this (ones where execs can read the market and change course) and so those markets will have fewer informed bettors. The execs will then end up with lightly-traded, inaccurate markets on events they control, but probably still reasonably accurate predictions on events that they can't. That is maybe still useful, but it means you will have to think hard about the nature of each market before offering contracts on it, which may not really be easier than just doing the forecasting some other way.
- sdwr 2y ago
  It's like how there's an inherent value to adding numbers together on a calculator. It "just works". Once you have it, you can rely on it to do the math part while you do more complicated things. A prediction market that is a dance between observer and market and agent doesn't "just work". You can't rely on its predictions because they are conditional on your choices, it's a complex feedback loop.
directevolve 2y ago
How much money was in this prediction market? I can’t imagine it was that much. The problem here may have been with a market that’s too small to motivate thinking through the issue beyond a simple base rate, not that its large size made influential betters act to change the outcome in order to profit from the market.
nl 2y ago
I think internal corporate prediction markets bake in the likelihood of this happening.

by kibwen 2y ago

benlivengood 2y ago

> that's a distributed market for bidding on contracts. Could $10,000 equivalent of the yearly prediction market awards have actually moved a Google executive-level job search if they were spent directly on that process? That's less than a month's salary for a sourcer, recruiter, and interviewer.

jjmarr 2y ago

Your objection assumes that there is an inherent value to accurate predictions, independent of being able to use those predictions to make decisions.

lupire 2y ago
Yes, that's what a "prediction market" is.
ElevenLathe 2y ago
The problem is that there is a misalignment of incentives. In this scenario, the execs wanted the hire done, so seeing the long odds on that happening motivated them to do the hire, and it got done and they were happy. But from the point of view of the bettors, they just lost their bet! The next time they make a bet, they will remember this and avoid betting on markets like this (ones where execs can read the market and change course) and so those markets will have fewer informed bettors. The execs will then end up with lightly-traded, inaccurate markets on events they control, but probably still reasonably accurate predictions on events that they can't. That is maybe still useful, but it means you will have to think hard about the nature of each market before offering contracts on it, which may not really be easier than just doing the forecasting some other way.
sdwr 2y ago
It's like how there's an inherent value to adding numbers together on a calculator. It "just works". Once you have it, you can rely on it to do the math part while you do more complicated things. A prediction market that is a dance between observer and market and agent doesn't "just work". You can't rely on its predictions because they are conditional on your choices, it's a complex feedback loop.

directevolve 2y ago

How much money was in this prediction market? I can’t imagine it was that much. The problem here may have been with a market that’s too small to motivate thinking through the issue beyond a simple base rate, not that its large size made influential betters act to change the outcome in order to profit from the market.

nl 2y ago

I think internal corporate prediction markets bake in the likelihood of this happening.