Yes, this is possible. It smells a bit of 4d-chess. As far as I can tell he already had finalized his position by the time the WSJ interview came out.
I’ve dug a little deeper and it seems he did do a bunch of research on polling data. I was a bit too rash to say he had no inside information whatsoever. Plausibly he had some. The degree of the inside information he would need is very high. It seems he did a similar Kelly bet calculation since he report his all-things-considered probability to be 80-90%:
“With so much money on the line, Théo said he is feeling nervous, though he believes Trump has an 80%-90% chance to win the election.
“A surprise can always occur,” Théo told The Journal.”
I have difficulty believing one can get this kind of certainty for all-things-considered-probability for something as noisy and tight as US presidential election. [but he won both the electoral college and popular vote bet]
To me it just seems like understanding the competitive nature of the prediction markets.
In our bubble, prediction markets are celebrated as a way to find truth collectively, in a way that disincentivizes bullshit. And that’s what they are… from outside.
But it’s not how it works from the perspective of the person who wants to make money on the market! You don’t want to cooperate on finding the truth; you actually wish for everyone else to be as wrong as possible, because that’s when you make most money. Finding the truth is what the mechanism does as a whole; it’s not what the individual participants want to do. (Similarly how economical competition reduces the prices of goods, but each individual producer wishes they could sell things as expensively as possible.) Telling the truth means leaving money on the table. As a rational money-maximizer, you wish that other people believe that you are an idiot! That will encourage them to bet against you more, as opposed to updating towards your position; and that’s how you make more money.
This goes strongly against our social instincts. People want to be respected as smart. That’s because in social situation, your status matters. But the prediction markets are the opposite of that: status doesn’t matter at all, only being right matters. It makes sense to sacrifice your status in order to make more money. Would you rather be rich, or famous as a superforecaster?
This could be a reason why money-based prediction markets will systematically differ from prestige-based prediction markets. In money-based markets, charisma is a dump stat. In prestige-based ones, that’s kinda the entire point.
Yes, this is possible. It smells a bit of 4d-chess. As far as I can tell he already had finalized his position by the time the WSJ interview came out.
I’ve dug a little deeper and it seems he did do a bunch of research on polling data. I was a bit too rash to say he had no inside information whatsoever. Plausibly he had some. The degree of the inside information he would need is very high. It seems he did a similar Kelly bet calculation since he report his all-things-considered probability to be 80-90%:
“With so much money on the line, Théo said he is feeling nervous, though he believes Trump has an 80%-90% chance to win the election.
“A surprise can always occur,” Théo told The Journal.”
I have difficulty believing one can get this kind of certainty for all-things-considered-probability for something as noisy and tight as US presidential election. [but he won both the electoral college and popular vote bet]
To me it just seems like understanding the competitive nature of the prediction markets.
In our bubble, prediction markets are celebrated as a way to find truth collectively, in a way that disincentivizes bullshit. And that’s what they are… from outside.
But it’s not how it works from the perspective of the person who wants to make money on the market! You don’t want to cooperate on finding the truth; you actually wish for everyone else to be as wrong as possible, because that’s when you make most money. Finding the truth is what the mechanism does as a whole; it’s not what the individual participants want to do. (Similarly how economical competition reduces the prices of goods, but each individual producer wishes they could sell things as expensively as possible.) Telling the truth means leaving money on the table. As a rational money-maximizer, you wish that other people believe that you are an idiot! That will encourage them to bet against you more, as opposed to updating towards your position; and that’s how you make more money.
This goes strongly against our social instincts. People want to be respected as smart. That’s because in social situation, your status matters. But the prediction markets are the opposite of that: status doesn’t matter at all, only being right matters. It makes sense to sacrifice your status in order to make more money. Would you rather be rich, or famous as a superforecaster?
This could be a reason why money-based prediction markets will systematically differ from prestige-based prediction markets. In money-based markets, charisma is a dump stat. In prestige-based ones, that’s kinda the entire point.