Hm okay. And is this a problem for prediction markets too, even though participants expect to profit from their time spent?
The way I imagine it, sloppier traders will treat a batch of nearly identical questions as identical, arbitraging among them and causing the prices to converge. Meanwhile, the more literal-minded traders will think carefully about how the small changes in the wording might imply large changes in probability, and they will occasionally profit by pushing the batch of prices apart.
But maybe most traders won’t be that patient, and will prefer meta-resolution or offloading.
Generally agree that there’s something interesting here, but I’m still skeptical that in most prediction market cases there would be enough money across questions, and enough variance in probabilities, for this to work well.
Hm okay. And is this a problem for prediction markets too, even though participants expect to profit from their time spent?
The way I imagine it, sloppier traders will treat a batch of nearly identical questions as identical, arbitraging among them and causing the prices to converge. Meanwhile, the more literal-minded traders will think carefully about how the small changes in the wording might imply large changes in probability, and they will occasionally profit by pushing the batch of prices apart.
But maybe most traders won’t be that patient, and will prefer meta-resolution or offloading.
I still feel like I’m onto something here...
Generally agree that there’s something interesting here, but I’m still skeptical that in most prediction market cases there would be enough money across questions, and enough variance in probabilities, for this to work well.