Also, on the Petrov day market, let’s suppose the question had been “What % of Petrov Day will elapse before someone uses the big red button to take down Less Wrong’s frontpage for the rest of the day?” (“for the rest of the day” is the only change.) I would consider this reasonably unambiguous—if LW decides to bring the page back up because it was a “mistake” then it shouldn’t resolve yet. But I suspect that people would have bet on that nearly the same as the actual question, and your hypothetical user who saw the site was down at 10% would also have been burned. It’s still better to avoid the ambiguity, I agree, but the problem of traders being burned by details is still there even if you avoid ambiguity in the details.
This sort of thing happens in the financial markets too. I’m thinking of all the games that happen over credit-default-swaps, for example. It would be nice if we could magically reduce complexity to reduce the impact of these sorts of issues, but it’s a risk market participants are taking on by trading in the markets, and I think the value the markets provide is still clearly worth it (or else people wouldn’t be willing to trade in them)!
Note that it says “the degree of uncertainty remaining is insufficient to render the market interesting” AND <5% or >95%.
This seems reasonable to me. Note that degree varies by market—an absolute probability by itself wouldn’t be a good rule. If it was already very unlikely (e.g. “Will a nuclear bomb be detonated in NYC this year”), then for the degree of uncertainty to become uninteresting it has to become much more unlikely in a way that rules out most of the previous probability space.
I’ve thought about this type of case a decent amount, and I think a perfectly reasonable approach is to resove early when the uncertainty is almost entirely gone, but with the commitment to re-open and re-resolve as needed in the event that the “almost entirely” turns out to be relevant.
Classic example: “Who wins election X?” Resolve as soon as projected by mainstream decision desks. But on a large number of election markets, there will surely be some small number of wrong projections, so you undo the resolution, reopen the market, and eventually re-resolve as needed.
Pro: avoids locking up mana unnecessarily. Con: undoing resolutions can cause people to have negative mana.
Philosophically, you can look at this as giving everyone a loan based on the presumptive resolution.