Combo Markets, Live!

Prediction markets let people bet on events of interest. This aggregates info on those events into market prices. So if you want to know the chance of an event, consider sponsoring a prediction market on it, and then watching the price. And if you want to persuade observers of a chance, consider betting in such a market, to change the price.

Sadly, the CFTC is cracking down on Intrade, making it harder to sponsor or use such markets. I can’t do much about that. But I can help improve the tech. For example, combinatorial prediction markets can let users bet on the chances of many unforeseen combinations of events. This can aggregate a lot more info on those events, as it lets users spontaneously express their opinions on a lot more topics.

Others have built combo markets. For example, WiseQ let people bet on certain combinations of events on the last election, such as whether the same party would win in two particular states. But those other markets allow inconsistencies, often big, between estimates on different questions. Our DAGGRE markets, in contrast, maintain exact globally consistency (up to machine precision) over a large combinatorial space of estimates, And they are live, today, for you to see and use at DAGGRE.org!

Let me explain. As I said five months ago:

Within a few months we will field an edit-based system where users can browse current answer estimates, and for each estimate can:

  • Edit the value. After you change an estimate to a new value, estimates that users see on all questions are Bayes-rule updates from that new value.
  • Assume a value. After you assume a value for this estimate, all estimates you see on all questions are conditional on this assumption. (more)

I said that we need to compute current estimates, edit limits, and long vs. short relative positions, and that we can now do these exactly (well, up to machine precision) with globally consistent estimates, in the case of a low-treewidth Markov network. Other approaches to combo markets allow inconsistencies, often big, between estimates on different questions. Large inconsistencies can hinder information aggregation, and risk large financial losses to clever traders who find them.

OK five months is not “few”, but today I can announce: we are live! If you register at DAGGRE.org, you can join hundreds of others who browse and edit estimates on over 100 questions intended to be of interest to the US intelligence community. We hand out $3000 a month to users in proportion to their activity (as 60 50$ Amazon gift cards; details here).

Actually, you could have done all that a year ago. But today you can also make assumptions, and then browse and edit as before. For example, we ask if foreign armies will fight in Syria soon, and also if Syria will use chem or bio weapons soon. So if you think that Syria using chem weapons would increase the chance of a foreign fight, you can assume that chem weapon use, and then edit the foreign fighter chance accordingly.

Actually you could have done that a month ago. But the system was slow and buggy; it is now much better. Which is why I’m announcing now. Yes, we still limit which estimates can be edited for any given set of assumptions; we have to do that to keep a low treewidth network of relations. But compared to ordinary prediction markets, this is a major advance in functionality. And we’ll keep working to relax these limitations.

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  • http://berekuk.ru/ Vyacheslav Matyukhin

    Is DAGGRE US-only? /register/ form, weirdly, asks both for “Country or Citizenship” and requires me to be US citizen.

    • Tim Tyler

      It says: “You must be 18 years or older and an U.S. citizen to participate in the DAGGRE Project.”

    • Charles R. Twardy

      Unfortunately the official market is US only this year.  But if you’re keen to try, we could use beta testers for the development site.  We also really encourage US Citizens living outside the US to join. 

  • Newerspeak

    I can’t do much about that.

    Would it really be so hard to rename the thing?  Call it a  Prediction Credit Exchange.  People deserve credit for making correct predictions.  Everyone knows that.

    The Soviet Union could swallow market-based reforms when they were called “new efficiency mechanisms”.  Isn’t it just possible that ordinary people will be receptive to the idea that A Bet Is A Tax On Bullshit than to something that sounds like Hedge Fund Truth?

    Considering all the good to be done, isn’t it worth tuning up your rhetoric just a little?

    • http://overcomingbias.com RobinHanson

      If your tried to go public as a sports bookie, doing all the usual things that sports bookies do, except using your new terminology, you’d still be arrested as violating anti-gambling laws.

  • VV

    I don’t get it. If you reward activity instead of accuracy, there is no incentive to make accurate predictions.

    • Drewfus

      There is still the joy of picking winners

    • http://overcomingbias.com RobinHanson

      Our project has a government funder, who seems themselves as developing methods to be used within the government. They’ve decided that since government workers are not paid for performance, neither should our participants be paid for performance.

      • VV

         Ok, but then don’t call it a prediction market, call it a prediction aggregator.

        Anyway, it seems to me that your system could yield better performances if you just asked people to volunteer their time rather than reward activity. The way you are doing it now rewards people for making random predictions, IIUC.

    • Charles R. Twardy

      There is incentive: we track your score and keep a leaderboard.  That’s enough for a lot of people. And just making bad predictions will run you out of points.

      • Charles R. Twardy

         Hm. Don’t like the way it inserts my reply above previous replies. Sorry.

      • http://juridicalcoherence.blogspot.com/ srdiamond

        There’s a lot to dislike in the new system.

      • VV

        There is incentive: we track your score and keep a leaderboard.  That’s enough for a lot of people.

        It would be enough if you weren’t rewarding mere activity with real money.

        And just making bad predictions will run you out of points.

        How difficult it is to create multiple accounts, or to delete and recreate them?

        Anyway, users could just play safe and bet on easy question, avoiding the hard ones, since there is no incentive to beat the ‘market’.

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