Thanks for the interesting question. So now the other question: it seems that these payments make these prediction markets causal, they themselves affect the outcome of their own predictions.
This seems like a bug. What about a prediction market based on ‘reputation’, where you start with little reputation and each accurate prediction, made in advance of the event happening and signed to the blockchain, increases reputation. You could also in theory use a similar kind of market for ‘observation’, as in, an observer who is a fair observer of events would record what they observed and gain reputation while ‘alternative facts’ biased observers lose reputation. Presumably the reputation updates would require some kind of inference to be performed automatically.
It has occurred to me that to make this work, both “observers” and “predictors” must be AI systems with fixed source code with their hashes committed to the blockchain. This makes them deterministic and this determinism can be checked by all chain members.
Anyways regardless of how we do it, this seems like a bug. The reason the “market price” is a fair price is because if it were consistently unfair, someone could make money off trades with their knowledge of the consistent unfairness, and after they gain sufficiently money, their ‘votes’ as a market participant grow in power until well informed participants effectively control the market price. (IRL example : hedge funds).
Presumably a market with ‘reputation’ or some other meta value that can be gained or lost would have this same convergence.
So then how do you reward market participants to give them an incentive to gain reputation. What if...you could put predictions/observations onto the blockchain in encrypted form and later put on the blockchain the key. Then you could get paid as a high reputation observer/predictor to share your observations/predictions in advance with paying customers.
Thanks for the interesting question. So now the other question: it seems that these payments make these prediction markets causal, they themselves affect the outcome of their own predictions.
This seems like a bug. What about a prediction market based on ‘reputation’, where you start with little reputation and each accurate prediction, made in advance of the event happening and signed to the blockchain, increases reputation. You could also in theory use a similar kind of market for ‘observation’, as in, an observer who is a fair observer of events would record what they observed and gain reputation while ‘alternative facts’ biased observers lose reputation. Presumably the reputation updates would require some kind of inference to be performed automatically.
It has occurred to me that to make this work, both “observers” and “predictors” must be AI systems with fixed source code with their hashes committed to the blockchain. This makes them deterministic and this determinism can be checked by all chain members.
Anyways regardless of how we do it, this seems like a bug. The reason the “market price” is a fair price is because if it were consistently unfair, someone could make money off trades with their knowledge of the consistent unfairness, and after they gain sufficiently money, their ‘votes’ as a market participant grow in power until well informed participants effectively control the market price. (IRL example : hedge funds).
Presumably a market with ‘reputation’ or some other meta value that can be gained or lost would have this same convergence.
So then how do you reward market participants to give them an incentive to gain reputation. What if...you could put predictions/observations onto the blockchain in encrypted form and later put on the blockchain the key. Then you could get paid as a high reputation observer/predictor to share your observations/predictions in advance with paying customers.