Most bets I see are on the order of $10-$1000 which, according to the Kelly Criterion, implies negligible confidence. I’m willing to bet substantially more than that.
If we had a real prediction market with proper derivatives, low fees, high liquidity, reputable oracles, etcetera, then I’d just use the standard exchange, but we don’t. Consequently, market friction vastly outweighs actual probabilities in importance.
Perhaps you mean that the other person should come up with the odds, and then you’ll determine your bet amount using the Kelly criterion, assuming a 99% probability of winning for yourself.
Bingo. This is exactly what I mean. Thank you for clarifying. It is important to note that “probability of winning” is not the same as “probability of getting paid, and thus profiting”. It’s the latter that I care about.
Most bets I see are on the order of $10-$1000 which, according to the Kelly Criterion, implies negligible confidence. I’m willing to bet substantially more than that.
If we had a real prediction market with proper derivatives, low fees, high liquidity, reputable oracles, etcetera, then I’d just use the standard exchange, but we don’t. Consequently, market friction vastly outweighs actual probabilities in importance.
Bingo. This is exactly what I mean. Thank you for clarifying. It is important to note that “probability of winning” is not the same as “probability of getting paid, and thus profiting”. It’s the latter that I care about.