I thought about this a bit more, and I’m worried that this is going to be a long-running problem for the reliability of prediction markets for low-probability events.
Most of the problems we currently observe seem like “teething issues” that can be solved with higher liquidity, lower transaction costs, and better design (for example, by having bets denominated in S&P 500 or other stock portfolios rather than $s). But if you should understand “yes” predictions for many of those markets as an implicit bet on differing variances of time value of money in the future, it might be hard to construct a good design that gets around these issues to allow the markets to reflect true probabilities, especially for low-probability events.
(I’m optimistic that it’s possible, unlike some other issues, but this one seems thornier than most).
I think in an ideal world we’d have prediction markets structured around several different levels of investment risk, so that people with different levels of investment risk tolerance can make bets (and we might also observe fascinating differences if the odds diverge, eg if AGI probabilities are massively different between S&P 500 bets and T-bills bets, for example).