Comments on: Coherent Futures

By: Robin Hanson has convinced Concensus Point to support combinatorial prediction markets. | Midas Oracle .ORG

Sat, 30 May 2009 20:53:27 +0000

[...] Robin Hanson has convinced Concensus Point to support combinatorial prediction markets. Written by Chris F. Masse on January 21, 2009 — 6 Comments Robin Hanson: [...]

By: Richard Hollerith

Richard Hollerith — Thu, 25 Dec 2008 10:05:35 +0000

look at the low-hanging fruit, probably software projects

If the source code for the software project is freely available, then the futures contract can be specified in a formal language, that is, it can consist of a computer program that accepts the source code as input and outputs text explaining who owes who what amount of money. The advantage of using a formal language for a contract is that the the cost of adjudicating the contract does not rise much as the complexity of the contract grows because (briefly) the chances that a judge or jury or even a lawyer is needed is much lower than when the contract is written in a natural or informal language like most legal contracts are. There have been at least a half dozen papers (written by programming-language researchers and a legal scholar) on formal languages in which to write contracts, and I can provide references to anyone who contacts me back channel. I can also provide detailed examples of very complex formal futures contracts about source code that will tend to be economically valuable.

I think it would prove economically very valuable to make it possible for professional computer programmers to make money like derivatives traders do; it would provide a middle way between the programmer’s being a contractor (or employee) and the programmer’s being a stockholder in a “startup” (a young corporation). It is also an answer to the question of how society can drastically increase the number of programmers making a good living working on open-source software: make a market where people can trade bets on the future availability of specific economically-valuable modifications of the software: the programmer makes a large bet that such and such modification of such and such software will become available by such and such date, then personally uses his/her programming skills to make the modification available. There is a “free rider” problem in that if two programmers have bets on the availabilility of the same modification, then it is in the interests of each to have the other one do all the work of making the modification available, and I am not enough of an economist or mechanism designer to know how pernicious or tractable that problem is.

By: Robin Hanson

Robin Hanson — Thu, 25 Dec 2008 00:52:55 +0000

Peter, my post described all these different factions with very different perspectives. At first one could just get representatives from several groups to contribute their intuitive judgments, weighed by their willingness to bet. A coherent summary of even that would be quite valuable I think. Could even that not be induced via sufficient subsidy and publicity?

By: Peter McCluskey

Peter McCluskey — Thu, 25 Dec 2008 00:01:14 +0000

Robin: yes, if you ignore questions of whether the information is affordable, then there isn’t any problem.

By: Philip Goetz

Philip Goetz — Wed, 24 Dec 2008 21:55:39 +0000

“However, I am willing to make at least one more bet of the type shown above – $1000 inflation-adjusted payout if someone builds a superintelligence (which must at least be strictly transhuman in the sense of dominating a human on any test of intelligence) without worrying at all about Friendliness, and the Earth is still there afterward.”

I think you can delete the ambiguous clause “and the Earth is still there afterward.” The continued existence of Eliezer, the other bettor, and currency, should suffice.

By: Eliezer Yudkowsky

Eliezer Yudkowsky — Wed, 24 Dec 2008 21:25:28 +0000

de Blanc, you surprise me. Why, or are you just making markets?

By: Robin Hanson

Robin Hanson — Wed, 24 Dec 2008 19:27:42 +0000

Peter M., the subsidy level I set is my offer price for info. If no one accepts my offer, I lose nothing, and if someone does accept it, I’ve gained info at the price I set. Of course there are also fixed costs associated with setting up such a system, so I’d want to set my price high enough to produce enough volume to cover those fixed costs as well.

By: Peter de Blanc

Peter de Blanc — Wed, 24 Dec 2008 18:43:55 +0000

I’ll raise the bid to $20.

By: Peter McCluskey

Peter McCluskey — Wed, 24 Dec 2008 17:36:08 +0000

Robin: yes, I was imprecise. By “informative prices” I meant prices that provide information that could plausibly be considered more valuable than the subsidy used to generate them.
What you get from observing zero trades is nearly worthless without a fair amount of information about the traders who thought about trading. If the initial price is set to a price that reflects the readily available information, I expect you’ll often get zero trades. If you set the initial price somewhere else, the first few trades will give you information that is readily available.

By: frelkins

frelkins — Wed, 24 Dec 2008 01:45:11 +0000

@Jeff

Alas, I cannot do so; I hope you understand! However, I am trying to get my hair to the prediction market conference in SF this coming Jan. There I will be able to talk about our market, our vendor – with whom I’m quite proud to be associated – and my experiences running the market.

If I can manage to get there, I will be happy to talk to everyone who needs help. I have also tried to hold meet-ups here in NYC but no one seems much interested recently due to the financial crisis. Hopefully that will soon change.

Finally, my 2007 speech is available, altho’ some corporate details are a little different due to positive restructuring – still, the main story is still valid and I hope inspiring. The speech at least I can freely share altho’ it is a little large at 26mg of QT.