Hopefully it’s not too late to try to keep the focus on the fun puzzles, etc! There really does seem to be an alarming amount of craziness floating around LW, along with the constant weird attempts to explicitly model things that we evolved to understand instinctively (eg most aspects of social interaction). Reading that stuff slightly negatively affected my mental health despite thinking it was mostly silly—to the extent it’s taken seriously it seems like it could have more substantial negative effects.
Liam Donovan
If anyone wants to get money onto Polymarket (real-money prediction market with no limits, no fees, and a wide variety of markets), I can facilitate that for free. Send me cash or crypto and I will send money directly to your poly account. As a heavy polymarket user I’m somewhat sad more LW people aren’t taking the opportunity to bet on their beliefs, so I’d like to make it as easy as possible for anyone interested.
What prediction markets are liquid enough for a fund to make sense? (unless you were just referring to the crypto trading part?)
Risk neutral pricing is always a danger when trying to make inferences about real world probabilities based on market pricing, but it’s usually a negligible one because participants in current prediction markets are generally speculators with no built-in exposure to the underlying asset, or ability to hedge against other markets.
On the other hand, implied probabilities from options pricing can differ significantly from real world probability, because any participant in the options market can hedge their position against the underlying asset.
“In all the examples we’re talking about, those risk premiums are tiny relative to the numbers involved so they don’t make a significant difference to how we should be calculating the “market implied” odds.” What evidence do you have that this is true? Your post is taking risk neutral probabilites from the market + your own opinion that risk neutral is similar to real world, then presenting that as the “market probability”, which is very misleading.
Edit: Maybe a better framing is that in order for option probabilities to give us a ~real world pdf of asset price at a given time, the asset needs to be approximately a martingale from now to the time in question. Many people would strongly disagree that BTC/ETH are even approximately a martingale on this time scale (they think there’s large positive drift). You are making a strong claim that is contrary to the view of many or most of the top crypto traders in the market, and yet you don’t make this clear but instead claim it’s a “market probability”, with the implication that people should defer to it unless they have strong domain knowledge.
I’m happy to; no commission needed. If anyone else wants to get money from fiat into polymarket easily with no fee, just let me know
https://polymarket.com/market/will-benjamin-netanyahu-remain-prime-minister-of-israel-through-june-30-2021 If you want to, you can in fact bet that Netanyahu will be PM on June 30th at 30c
This isn’t really a meaningful explanation for why risk neutral vs real world is meaningless? To me “the credence I have that something happens” is actually a meaningful, important number that is by definition different from the risk neutral price. You can argue that all market probabilities may deviate from real-world probabilities in some way, but that doesn’t make real-world probability meaningless!
https://www.betonline.ag/sportsbook/futures-and-props/politics-futures has a market for ”California Governor on 12/31/2021″, which should function as a great proxy for the chances of Newsom being recalled. They’re quoting .0625@? for the chance of Newsom not being governor on 12⁄31 (they accept bets on Newsom remaining governor, but not on Newsom being removed as governor, thus the ”?”)
You think there’s only an 80% chance the olympics happen? This is a bit of a tangent but I’d love to hear why, since I have 100k+ shares of OLY2021 on FTX and haven’t heard a convincing argument for the odds being below 90%.
re options, presumably Zvi is using the real world measure, which you can’treally infer from options prices without making a lot of dubious assumptions. Can you elaborate on how/why Zvi is “off the market forecast”?
Cumulative cases are still much lower, right? I assumed that “case count” meant cumulative cases, but it sounds like you’re interpreting it as daily cases, which would explain our difference. Given that Scott only gives 50% chance it seems much more likely that he meant cumulative cases too imho
Can you elaborate on why India’s cases being higher than the US is an instabuy to 80%? I haven’t given it any thought but it seems like that would require a pretty big increase in cases there?
Because mr co2 guy was clearly making a -EV bet that happened to pay off this time :)
FWIW FTX allows you to bet on its prediction markets on margin with a tokenized version of the S&P 500 as collateral, which accomplishes exactly what you want to accomplish here
markets that easily allow you to make tens of thousands of dollars with nearly no risk.
Back during November-January, FTX had a contract called TRUMPFEB that gave ~risk free ~15% returns in 2 months, up to millions of dollars (by betting against Trump to be president in Feburary). Right now the FTX OLY2021 market comes pretty darn close—you can bet hundreds of thousands of dollars on the Olympics happening at 76c. There is obviously the risk of the Olympics not happening, but I haven’t seen a good case for that risk being under 10%, making this a fantastic trade in expectation.
Just commenting to say this is a great post and I’m surprised it hasn’t gotten more engagement (maybe it’s so good there’s nothing else to say)
The fees are always 2% of the transaction value; i.e. numShares*avgPrice. The trick I described lets you substitute (1-avgPrice) when that would be cheaper . I should’ve been much clearer about this initially; I forgot that most people here probably don’t know the polymarket fee structure.
You still pay fees, they’re just lower. Most sharps on polymarket do indeed do this
I don’t know about Omen, but on Polymarket you can mostly avoid this issue by minting a complete set of shares and selling the cheaper side. In your example this would only cost you $0.0004 in fees to acquire shares at $0.98. The easiest way I know of to mint complete shares is to add and then immediately remove liquidity
But he’s been a professional politics gambler for years now, which seems like much stronger evidence for evaluating his calibration than the results of one election cycle?
Detonation—an entertaining book that tries to flesh out a fast takeoff scenario and explicitly cites Bostrom and Yudkowsky. However, it also makes some extremely dubious choices; for example, the protagonist is a Marine hired to fight against the unfriendly AI, which doesn’t seem like a very effective AI alignment strategy.