Idea for dealing with the risk premium hedging problem:
A prediction market that requires participants to make two predictions on each question, one in a real money market, and one where they just get points like metaculus.
Then if there’s no difference, I’m pretty sure you can be confidant risk premiums and hedging didn’t have an effect. If there is a difference then it’s a bit more complex to know why that is (It’s not necessarily because of hedging, could be that people just don’t care about the points), but it can give a hint that there’s hedging, especially if the difference comes from players who have a good track record in both categories. If you think you know why the difference is there then you can use the results from both markets to get better information for decision making.
Idea for dealing with the risk premium hedging problem:
A prediction market that requires participants to make two predictions on each question, one in a real money market, and one where they just get points like metaculus.
Then if there’s no difference, I’m pretty sure you can be confidant risk premiums and hedging didn’t have an effect. If there is a difference then it’s a bit more complex to know why that is (It’s not necessarily because of hedging, could be that people just don’t care about the points), but it can give a hint that there’s hedging, especially if the difference comes from players who have a good track record in both categories. If you think you know why the difference is there then you can use the results from both markets to get better information for decision making.
Do you think something like this could work?
I don’t really know how you incentivise people (seriously) in the non-real money prediction markets.
Non-money prediction markets have lots of difficulties to them:
How do you size your bet? (Ie knowing a probability vs “higher” or “lower” than market estimate
Difficult to arbitrage (ie share information between markets)
How do you show your conviction (this is 50% and I’m certain it’s a coin flip vs this is 50% because I don’t understand the question)