4 ms·
This is the best response in thread, imo. Is there a term for this phenomenon?
by DiggyJohnson 2y ago
This is the best response in thread, imo. Is there a term for this phenomenon?
- James_K 2y agoI don't think so, though I often find someone has thought of the same thing I have and given it a name. The root of the issue is a matter of language. Events don't have probabilities. You don't predict a 50% chance of rain, you predict rain with a 50% certainty. (There are a lot of internet brain teasers that exploit this subtle ideological difference.) The 50% is talking about how often you're correct, not how likely the rain is to happen. Probabilities don't really exist; it either rains or it doesn't.
- gowld 2y agoIt's statistical information arbitrage. Let's say you go to the futures market: Seller pays a contract-buyer $1 if it rains tomorrow. How much will seller charge for that contract? Bookmaker using forecaster A will sell that contract for $0.51 every day, and earn a profit of $0.01/contract, on average. Bookmaker using forecaster B and their clients will buy that contract on probably sunny says, and bankrupt Forecaster A. Similar result if Bookmaker B sells contracts to Bookmaker A, at $0.11 on probably-sunny days, and $0.90 on probably-rainy days.