This could be them being slow, or it could be them being more accurate in understanding random elements where others were overconfident. Consider the following market: ‘I roll a d10 once per day. Will I roll a 0 within the first 10 days from when this market starts?’.
Now consider what happens if I don’t actually roll a 0:
Day 0, this market’s value is ~65% Day 1, this market’s value is ~61% Day 2, this market’s value is ~57% Day 3, this market’s value is ~52% Day 4, this market’s value is ~47% Day 5, this market’s value is ~41% Day 6, this market’s value is ~34% Day 7, this market’s value is ~27% Day 8, this market’s value is ~19% Day 9, this market’s value is ~10% Day 10, this market’s value is ~0%
This looks very much like the prediction market was slow to update, when in fact the prediction market was being purely rational.
This could be them being slow, or it could be them being more accurate in understanding random elements where others were overconfident. Consider the following market: ‘I roll a d10 once per day. Will I roll a 0 within the first 10 days from when this market starts?’.
Now consider what happens if I don’t actually roll a 0:
Day 0, this market’s value is ~65%
Day 1, this market’s value is ~61%
Day 2, this market’s value is ~57%
Day 3, this market’s value is ~52%
Day 4, this market’s value is ~47%
Day 5, this market’s value is ~41%
Day 6, this market’s value is ~34%
Day 7, this market’s value is ~27%
Day 8, this market’s value is ~19%
Day 9, this market’s value is ~10%
Day 10, this market’s value is ~0%
This looks very much like the prediction market was slow to update, when in fact the prediction market was being purely rational.