Robin Hanson said, with Eliezer eventually concurring, that “bets like this will just recover interest rates, which give the exchange rate between resources on one date and resources on another date.”
E.g., it’s not impossible to bet money on the end of the world, but it’s impossible to do it in a way substantially different from taking a loan.
Oh, thanks for the pointer. I confess I wish Robin was less terse here.
I’m not sure I even understand the claim, what does it mean to “recover interest rates”? Is Robin claiming any such bet will either
Have payoffs such that [the person receiving money now and paying money later] could just take out a loan at prevailing interest rates to make this bet; or
Have at least one party who is being silly with money?
...oh, I think I get it, and IIUC the idea that fails is different from what I was suggesting.
The idea that fails is that you can make a prediction market from these bets and use it to recover a probability of apocalypse. I agree that won’t work, for the reason given: prices of these bets will be about both [probability of apocalypse] and [the value of money-now versus money-later, conditional on no apocalypse], and you can’t separate those effects.
I don’t think this automatically sinks the simpler idea of: if Alice and Bob disagree about the probability of an apocalypse, they may be able to make a bet that both consider positive-expected-utility. And I don’t think that bet would necessarily just be a combination of available market-rate loans? At least it doesn’t look like anyone is claiming that.
Robin Hanson said, with Eliezer eventually concurring, that “bets like this will just recover interest rates, which give the exchange rate between resources on one date and resources on another date.”
E.g., it’s not impossible to bet money on the end of the world, but it’s impossible to do it in a way substantially different from taking a loan.
Oh, thanks for the pointer. I confess I wish Robin was less terse here.
I’m not sure I even understand the claim, what does it mean to “recover interest rates”? Is Robin claiming any such bet will either
Have payoffs such that [the person receiving money now and paying money later] could just take out a loan at prevailing interest rates to make this bet; or
Have at least one party who is being silly with money?
...oh, I think I get it, and IIUC the idea that fails is different from what I was suggesting.
The idea that fails is that you can make a prediction market from these bets and use it to recover a probability of apocalypse. I agree that won’t work, for the reason given: prices of these bets will be about both [probability of apocalypse] and [the value of money-now versus money-later, conditional on no apocalypse], and you can’t separate those effects.
I don’t think this automatically sinks the simpler idea of: if Alice and Bob disagree about the probability of an apocalypse, they may be able to make a bet that both consider positive-expected-utility. And I don’t think that bet would necessarily just be a combination of available market-rate loans? At least it doesn’t look like anyone is claiming that.