The other day I was invited to an “anti-debate” on the above topic, scheduled for this afternoon. I’d not heard about the concept of an anti-debate before; here’s the description:
The Anti-Debate is a new format for debate where participants build on each other’s insights, so that greater complexity can emerge.
Despite its name, the Anti-Debate is not anti-debate. It actually starts out like a traditional debate, with opening statements and rebuttals. But then it goes further — guiding participants to explore how they might integrate their perspectives into a bigger picture. Hence our tagline: First Debate, Then Elevate.
Sounds reasonable to me. They refer to the concept of steel-manning, and I’m skeptical of that, but I agree that standard debate formats have problems (just read The Topeka School!) and I’m very open to this sort of alternative.
The organizer, Winter Ku, referred to my posts on “the statistical skepticism about betting markets versus polls (self-reinforcing prices, thin volume), and more recently the integrity and harm concerns in your ‘Uh oh prediction markets’ writing, e.g. manipulation, the absence of insider-trading rules, and the gambling-like risks to vulnerable users,” and it seemed like it would be fun to have a chance to speak on this with several hundred people who might well be inclined to disagree with me. At the very least, I’d get some good questions, lots of pushback, and I’d probably change my mind about a few things.
The anti-debate was to be held at Manifest, an annual festival about prediction markets and forecasting at the same California location that had this blogging workshop a couple months ago. Unfortunately I was only invited to the Manifest thing a couple days ago and I wasn’t able to fly out on such short notice.
I hope the anti-debate goes well without me! Actually, it’ll probably go better without me than with me. I think I’m a careful and interesting writer with lots of good ideas, but I don’t know how well I’d do in a live debate. I imagine I’d get flustered. On the other hand, sharing objections to prediction markets, in front of a crowd coming from a much different perspective than me, but open to listening, could possibly do some good, as well as being a learning experience for me.
So maybe next year! I don’t know if they’ll put the anti-debate up on youtube or whatever; if so, it would be interesting to see the arguments on both sides.
But the stock market is basically just a fuzzier prediction market removed by one step, isn’t it?
Like instead of betting on “will we go to war with Iran by such and such date”, you just purchase options on Raytheon or something.
Bobarella:
One difference between the stock market and prediction markets is that in the stock market you’re actually buying a piece of a company, whereas a prediction market is purely a bet.
Another difference is that the stock market can, in theory, continue to rise in value. People invest passively in the stock market with the expectation (although not the certainty) of steady returns in the 5% range. In contrast, prediction markets are set up to have negative expected value. Passively betting in prediction markets will lose money. This is not to say that prediction markets are a bad thing–your expected loss from betting in prediction markets corresponds to the fee taken by the market operators, and if the market has social value, then it’s fair enough that you have to pay for it–just that they’re different from stock markets in this way.
But the latest trend in the stock market, people are buying a piece of the company that they have no voting power over (by design), have restrictions which eliminates their ability to litigate over poor decisions, and can’t even propose changes unless they have a huge stake. This is all by design in the largest recent IPO in history.
No, you’re not (always) buying a piece of the company. You’re buying a hope/dream/feeling similar to what prediction markets report to be … oh, and some index funds will soon be required to buy into that “feeling”.
Yeah it’s a little wacky, but you still get cash flows through dividends
Anon:
Agreed. There’s a lot going on in the stock market. That said, look at the second paragraph in my comment above. Beyond the “piece in the company” thing, stock markets are just structured differently from prediction markets and so they can have positive expected return from passive investment, which can’t happen with a prediction market.
Yep, after a certain level, a business is now functioning mainly as advertising/marketing for the stock. That is where the money is at, all funded ultimately by debt that can only get paid off with future loans.
This is why there is no way to reduce the size of the gov budget, it needs to get ever larger with the funds mainly going into the pair blackholes of welfare/warfare, with various crises as excuses.
This is really obvious.
If you are wise, you buy a whole national stock market (or a subset of the n biggest companies). The only bet you are making is that hundreds of profitable companies (as verified under strong legal penalties) will on average over the course of several decade scontinue to be profitable. Buying individual stocks is for suckers.
A (sincere) question that should be asked, because 1% of prediction market participants win 77% of all profits (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6443103) — and which is very different from the relatively large percentage who make money in the stock market — how long will it be till prediction markets lose enough traders that the prediction markets lose (enough) liquidity so that it’s no longer viable?
That is, if you assume that someone who makes prediction market bets is learning from doing so and also has a finite amount of capital, and if you also assume that the trader will quit if they don’t win after n trades, what’s the likelihood that they will either eventually quit, because they either can’t learn how to win (enough) or they run out of capital to make bets?
I assume this can be answered by using agentic modeling that assumes a convex optimization function can be found, to find the typical time, after n trades, that a trader will quit.
In any case, to directly address the point of the post, prediction markets may just be a transient phenomenon. Eventually, enough people will learn that one can’t learn how to win or that occasionally placing a bet will always result in a loss. If this happens, then prediction markets won’t be able to function as a market with enough traders to insure a zero sum outcome.
Right?
It seems like you think that the same people are always betting on the prediction market. I respectfully doubt it. I can imagine three different types of bettors:
1. Professionals, some of them with inside knowledge
2. Betting addicts (like sports betting addicts).
3. Occasional bettors.
I do not have any numbers, but I think group #3 is probably a vast majority. They would sometimes take a bet and then move on. They might be doing it for fun or because they think they can make money quickly. If that is what most players were motivated by, there would not be much learning because of the ample fluctuation of bettors.
Raphael:
Subsets of a finite sets of bettors doesn’t work to disprove my thesis that a bettor will eventually quit after losing n bets. Your description of the subsets of bettors may have different values of time. That is, it may take the occasional bettor to learn much slower than the other two subsets, but the result will be the same: quit after n bets.
Btw, a geometric distribution (https://en.wikipedia.org/wiki/Geometric_distribution) can answer (at least naively) how many n bets have to be placed in order to make one winning bet (because we’re answering p(1-p)^(k-1), where k is the number of bets needed for the first win and p = .01). So, at the least, this will give an intuitive sense if you yourself will continue to bet if lose n bets successively.
There is much more money in running a casino in Monaco than playing the shell game at the Roman forum.
To get significant numbers of experts and casual players, you need to convince them that the game has rules which are enforced so anyone can win. So far the big for-profit prediction markets are failing at this, and to succeed they would have to spend more money and ban many topics that casual betters really like.
Interesting comparison!
Quote from the blog post: “Despite its name, the Anti-Debate is not anti-debate. It actually starts out like a traditional debate, with opening statements and rebuttals. But then it goes further — guiding participants to explore how they might integrate their perspectives into a bigger picture. Hence our tagline: First Debate, Then Elevate.”
New tagline proposal:
First debate, then relate, possibly integrate, and hopefully elevate.
(I’m skeptical of the usefulness of the concept in connection to the term and function of a debate. It seems to me it likely results in too many personal anecdotes, opinions, subjectivity, poor reasoning, etc, which in my view are already present way too much in discussions, and in my view are not directly related to the main function of a (certain type of) debate.
Also, I looked up the definition of “debate” and to me it seems there are several definitions that slightly differ, where one is “to consider something, relate” which seems possibly closely related to the possible goal and function of the later stages of the anti-debate concept)
Andrew wrote: ” Unfortunately I was only invited to the Manifest thing a couple days ago and I wasn’t able to fly out on such short notice.” I am no more paranoid than Richard M. Nixon, but I am tempted to believe that the “short notice” was on purpose and there was a secret market regarding the acceptance of the invitation. The fact there may be no evidence whatever for my belief, only strengthens my conclusion.
That’s both plausible and entertaining.
Andrew,
If you’re engaging with the organisers of Manifest and considering participating in the future, I think you should probably be aware that the event has in past years attracted a fair bit of controversy. Specifically, the event organisers have invited a number of people who—to put this as neutrally as I can—have a history of making controversial statements about race. At least one person prominent in the rationalist forecasting world has boycotted the event because of this.
The controversial speakers are discussed (among other things) in this Guardian article. You can read the organisers’ defence of their approach on the Effective Altruism forum, and see the debate in the comments.
Not advocating any particular response to this information on your part. Just thought you might want to know about this, if you didn’t already.
A well-moderated panel discussion would seem to be indistinguishable from an anti-debate. In my career I believe I learned the most from being a fly-on-the-wall for acrimonious exchanges between domain experts.
Honestly the biggest problem with prediction markets is that the market market control the predictions being bet on.. Unlike the stock market where they can only select from a small pool of existing companies to platform, prediction markets get to pick n choose