Guest post by Resident Contrarian
Thanks again to Manifold - I had a lot of fun on this project.
lol just lol this guy having $30,000 in this market is the most degenerate thing I've ever seen
Self-referential markets are unstable, and you shouldn't encourage them. Isn't that the lesson here?
In real life, wherever your fair price depends too much on everyone else's fair price, we get nasty breakdowns.
Bank runs, stock bubbles, even review wars over who gets to be #1 -- the moment a market resolves based on an internal trait instead of an external trait, you've given it a failure mode.
Don't have self-referential markets. Or, if you do, acknowledge you've added a random breakdown mode.
I liked this a piece a lot. Thank you for your summary and your neutral observer standpoint. I agree with all your conclusion
(Neutral is at least that how this comes across. I wasn't really following all the drama and don't know too much about it, and don't have a lot to judge on)
I hate to admit it but this story highlights why regulators hesitate to allow real money prediction markets and also why the US has this concept of an accredited investor.
Will there be a prediction market on whether prediction markets will take over betting markets?
If you bail out stupid behavior once, it will quickly become a habit. The best way to prevent this from happening again was to NOT bail out the dummy.