Here’s a rough description of an idea for a betting procedure that enables people who disagree about long-term questions to make bets, despite not wanting to commit to waiting until the long-term questions are resolved.
Suppose person A and person B disagree about whether P, but can’t find any clear concrete disagreements related to this question that can be decided soon. Since they want to bet on things that pay out soon (for concreteness say they only want to bet on things that can pay out within 5 years), they don’t end up betting on anything.
What they can do is they could agree to bet on P, and enter into a contract (or a good-faith agreement) that requires them to, after a period of 5 years, report their true odds about P. The contract would then enable either bettor to unanimously back out of the bet, at which point the payouts would be distributed according to the difference of the odds they agreed to and the average of the odds that they currently report. In other words, the bettor who was closer to the consensus after 5 years is paid out in proportion to how much closer they were.
To ensure that bettors approximately truthfully report their odds about P after the horizon of 5 years, the contract requires A and B to report their odds to a trusted intermediary (who announces these odds simultaneously), and requires either party to accept any follow-up bets at (some function of) these reported credences.
Bettors might agree ahead of time to the range of acceptable follow-up bet sizes, though importantly, follow-up bet sizes need to be expected to be relatively large (say, a non-trivial fraction of the existing bets) to ensure that bettors have an incentive to report something close to their true beliefs.
Follow-up bets could be revisited in the same way after another 5 years, and this would continue until P resolves, or until the betters settle. However, because bettors are required to take follow-up bets, they also have an incentive to develop accurate beliefs about P so we might expect disagreements to usually be resolved short of when P resolves. They furthermore have an incentive to arrive at a consensus if they want to avoid making follow-up bets.
On this mechanism, bettors know that they can expect to fairly resolve their bets on a short horizon, as each will have an incentive to end the bet according to their consensus-view of who was closer to the truth. Hence, bettors would be keen to bet with each-other about P if they think that they’re directionally right, even when they don’t want to wait until P completely is decided.
Anything predicated on “true odds” that are different from “odds actually encoded in wagers” is going to fail. The whole reason any bet is available is because people’s beliefs (“true odds”) differ. And in many (MANY!) cases, each believes the other to be at least somewhat irrational, or at least weighting evidence incorrectly. Why would we expect such a counterparty to get closer to truth over time, for a proposition that isn’t testable inside a reasonable time window?
A much better mechanism is to dive into cruxes and agree on shorter-term outcomes that you have different predictions for, based on your models. Bet on those.
To ensure that bettors approximately truthfully report their odds about P after the horizon of 5 years, the contract requires A and B to report their odds to a trusted intermediary (who announces these odds simultaneously), and requires either party to accept any follow-up bets at (some function of) these reported credences.
Are you thinking of requiring each party to accept bets on either side? And including from other parties, or only with each other? Being forced to bet both sides could ensure honesty, assuming they haven’t found other bets on the same or highly correlated outcomes they can use for arbitrage.
Are you thinking of requiring each party to accept bets on either side?
Being forced to bet both sides could ensure honesty, assuming they haven’t found other bets on the same or highly correlated outcomes they can use for arbitrage.
Yes. Good point.
And including from other parties, or only with each other?
I was thinking that betting would be restricted to the initial two parties (i.e. A and B), but I can imagine an alternative in which it’s unrestricted.
I’m not convinced this can’t be manipulated or at least won’t be very misleading, though.
You could imagine one party was betting at odds they consider very favourable to them, and the other party betting at odds they consider only slightly favourable, based on their respective beliefs. Then, even if they don’t change their credences, one party has more room to move their odds towards their own true credences, and so drag the average towards it, and take the intermediate payments,
If you can’t find better intermediate outcomes, it might be better to use a betting market and allow people to cash out early as odds change. Or, bet on how the odds on a market or Metaculus or whatever will change in a few years (with high enough volume so that it’s hard to manipulate).
You could imagine one party was betting at odds they consider very favourable to them, and the other party betting at odds they consider only slightly favourable, based on their respective beliefs. Then, even if they don’t change their credences, one party has more room to move their odds towards their own true credences, and so drag the average towards it, and take the intermediate payments,
Sorry, I’m confused. Isn’t the ‘problem’ that the bettor who takes a relatively more favourable odds has higher expected returns a problem with betting in general?
Hmm, ya, fair. Still, who pays who in the intermediate steps isn’t necessarily very informative about where the average credence is or where it’s going.
It is unless it’s clear that a side that made a mistake in entering a lopsided bet. I guess the rule-of-thumb is to follow big bets (which tends to be less clearly lopsided) or bets made by two people whose judgment you trust.
I don’t see how this follows. How would you know ahead of time that a bet is too lopsided in an adversarial setting with one side or both sides withholding private information, their true credences? And how lopsided is enough? Aren’t almost all bets somewhat lopsided?
Since one party will almost surely have more room between the implied credences of the first bet and their own credences, we should expect directional influence in the second bet or (set of bets) whether or not anyone’s beliefs changed. And if their credences aren’t actually changing, we would still expect payments from one side to the other.
Here’s a rough description of an idea for a betting procedure that enables people who disagree about long-term questions to make bets, despite not wanting to commit to waiting until the long-term questions are resolved.
Suppose person A and person B disagree about whether P, but can’t find any clear concrete disagreements related to this question that can be decided soon. Since they want to bet on things that pay out soon (for concreteness say they only want to bet on things that can pay out within 5 years), they don’t end up betting on anything.
What they can do is they could agree to bet on P, and enter into a contract (or a good-faith agreement) that requires them to, after a period of 5 years, report their true odds about P. The contract would then enable either bettor to unanimously back out of the bet, at which point the payouts would be distributed according to the difference of the odds they agreed to and the average of the odds that they currently report. In other words, the bettor who was closer to the consensus after 5 years is paid out in proportion to how much closer they were.
To ensure that bettors approximately truthfully report their odds about P after the horizon of 5 years, the contract requires A and B to report their odds to a trusted intermediary (who announces these odds simultaneously), and requires either party to accept any follow-up bets at (some function of) these reported credences.
Bettors might agree ahead of time to the range of acceptable follow-up bet sizes, though importantly, follow-up bet sizes need to be expected to be relatively large (say, a non-trivial fraction of the existing bets) to ensure that bettors have an incentive to report something close to their true beliefs.
Follow-up bets could be revisited in the same way after another 5 years, and this would continue until P resolves, or until the betters settle. However, because bettors are required to take follow-up bets, they also have an incentive to develop accurate beliefs about P so we might expect disagreements to usually be resolved short of when P resolves. They furthermore have an incentive to arrive at a consensus if they want to avoid making follow-up bets.
On this mechanism, bettors know that they can expect to fairly resolve their bets on a short horizon, as each will have an incentive to end the bet according to their consensus-view of who was closer to the truth. Hence, bettors would be keen to bet with each-other about P if they think that they’re directionally right, even when they don’t want to wait until P completely is decided.
Anything predicated on “true odds” that are different from “odds actually encoded in wagers” is going to fail. The whole reason any bet is available is because people’s beliefs (“true odds”) differ. And in many (MANY!) cases, each believes the other to be at least somewhat irrational, or at least weighting evidence incorrectly. Why would we expect such a counterparty to get closer to truth over time, for a proposition that isn’t testable inside a reasonable time window?
A much better mechanism is to dive into cruxes and agree on shorter-term outcomes that you have different predictions for, based on your models. Bet on those.
Are you thinking of requiring each party to accept bets on either side? And including from other parties, or only with each other? Being forced to bet both sides could ensure honesty, assuming they haven’t found other bets on the same or highly correlated outcomes they can use for arbitrage.
Yes. Good point.
I was thinking that betting would be restricted to the initial two parties (i.e. A and B), but I can imagine an alternative in which it’s unrestricted.
Interesting. It reminds me of Glen Weyl’s property tax idea.
I’m not convinced this can’t be manipulated or at least won’t be very misleading, though.
You could imagine one party was betting at odds they consider very favourable to them, and the other party betting at odds they consider only slightly favourable, based on their respective beliefs. Then, even if they don’t change their credences, one party has more room to move their odds towards their own true credences, and so drag the average towards it, and take the intermediate payments,
If you can’t find better intermediate outcomes, it might be better to use a betting market and allow people to cash out early as odds change. Or, bet on how the odds on a market or Metaculus or whatever will change in a few years (with high enough volume so that it’s hard to manipulate).
Sorry, I’m confused. Isn’t the ‘problem’ that the bettor who takes a relatively more favourable odds has higher expected returns a problem with betting in general?
Hmm, ya, fair. Still, who pays who in the intermediate steps isn’t necessarily very informative about where the average credence is or where it’s going.
It is unless it’s clear that a side that made a mistake in entering a lopsided bet. I guess the rule-of-thumb is to follow big bets (which tends to be less clearly lopsided) or bets made by two people whose judgment you trust.
I don’t see how this follows. How would you know ahead of time that a bet is too lopsided in an adversarial setting with one side or both sides withholding private information, their true credences? And how lopsided is enough? Aren’t almost all bets somewhat lopsided?
Since one party will almost surely have more room between the implied credences of the first bet and their own credences, we should expect directional influence in the second bet or (set of bets) whether or not anyone’s beliefs changed. And if their credences aren’t actually changing, we would still expect payments from one side to the other.