Peak TIME POTY Drama
The grayest of gray areas
1. Throwback
Until a few hours ago, to many traders, this year’s TIME Person of the Year race may have brought back memories of 2023. While last year’s selection of Donald Trump in an election year was fairly uncompetitive, the prior year the race had been wide open.
Sam Altman, fresh off a dramatic corporate coup and counter-coup, had been the betting market darling. Artificial intelligence was the first thing on the minds of many bettors, who were extremely online and extremely tech-forward. ChatGPT had been launched November 30th of the previous year, but it felt like a 2023 phenomenon. Some traders thought that there would be a joint award, with Altman sharing the cover with his company’s creation. In the days prior to the shortlist’s announcement, Altman had been ~25% and ChatGPT at ~15%. Meanwhile, shares of Taylor Swift could be purchased at just 8%, with other candidates like “The AI”, “Artificial Intelligence”, and Xi Jinping floating around the single digits.
With a bunch of AI options crowding out the others, it seemed inevitable that one of them would get selected, leading to great remonstrations about the failure of prediction markets in light of Swift’s swift victory.
This year’s campaign had been reminiscent, with AI once again leading for most of the year, this time in its own right. Buzz around Jensen Huang started to bubble up in September, after traders perhaps started to price in a desire for TIME to laud a single individual, and Huang’s star had continued to rise amidst Nvidia’s lobbying campaign in Washington, and as discourse around data centers, GPUs, and corporate valuations has risen to a fever-pitch. Sam Altman also seemed to be a dark horse contender.
Then…
At a seemingly legit url, the TIME cover has been probably leaked.
2. Gray Area
I’ve been having actual nightmares for years about something like this happening, and have warned about it in the comments a few times, so I can’t say it really came as a surprise. If anything “at least a 10% chance” from a comment a month ago was dramatically under-confident:
Perhaps it’s time to compare how different platforms have operationalized the TIME POTY markets.
Kalshi allows multiple options to resolve to pay out, and in fact, options pay out even if a person is just pictured or listed on the cover for a general category (like the leak above). Polymarket had a tiebreak system setup, whereby the first option listed among several would resolve YES, but they also just added multiple clarifications, and it appears that for “The Architects of AI,” the market resolves to an elusive “Other” category. I think this may have been created to make it easier for traders to not accidentally buy up one of the remaining options, all of which appear poised to resolve to NO if the leak is correct.
Neither of these outcomes strikes me as optimal, in hindsight. If you tried to arbitrage the two platforms, you would not have had a good time. The “AI” categories on both Kalshi and Polymarket seemingly will resolve to NO if the leak is correct, despite the cover having a big old “AI” on it.
Manifold can resolve to partial probabilities, but this introduces its own complexities. What if TIME were to announce… idk… a broad category that is inclusive of several people on the list? What if it’s several people or concepts, some of whom are listed among the options, but some of whom are not? The Manifold market tries to account for these particular possibilities, but there’s always been a chance that TIME would muddle the award in some unpredictable way.
As of now, it appears the market will need to resolve to some combination of the figures on the cover, pending the actual insides of the magazine, of course. The cover features Musk, Hassabis, Huang, and Altman, but also Amodei, Li, Zuckerberg, and Su! Several of these options were trading below 5% on Kalshi just 24 hours ago, and will likely resolve YES.
3. No Shortlist
We had hoped that things would become clearer a few days before the award, when TIME was due to release its shortlist. Often some of the shortlist members are clearly (at least, according to the market) uncompetitive for the main award, like Catherine, Princess of Wales, or Jerome Powell in 2024 or 2023, so it can narrow the prize down to just a couple possible selections.
This year, when it appeared that no shortlist was forthcoming, that still provided some interesting information for the market.
About 24 hours before the cover leak, traders heavily bought up the option “AI” on real money markets and on Manifold. While this could have been due to other information, I think the absence of a shortlist was pretty solid evidence towards a broader category of people being selected. The fact that several tech CEOs who were candidates for the award are on the cover looks like it lines up well with this theory. Why have a shortlist if half of the eventual winners are on it?
Around that same time, the market became quite confident that the POTY would be announced on December 11th, although this information was seemingly public and reported on. The reporting on subjects like these are starting to trust the prediction markets themselves though, which can create an interesting feedback loop.
4. Veracity of the Leak
Almost everyone is supremely confident that the leak is genuine. Traders had assigned about 50% probability mass to there not being a leak at all, but the market quickly soared into the 90s after the leaked cover was unearthed. I mean, haven’t these companies learned their lessons about not putting anything onto their website prior to the announcement?
It would certainly be something if TIME had leaked a fake cover in order to mess with prediction markets, but traders do not think this is at all likely. On a Twitter space, one savvy prediction market trader mused that it wasn’t worth a few tens of thousands of dollars to lose your job at TIME over, but I think naming “Prediction Markets” the POTY after getting their traders to burn a few millions on a fake leak would be darkly humorous.
If you’re excited by all this fun TIME-generated drama, then I suggest you wake up early and refresh the page to read the profiles!
If instead, you’re let down by the outcome of this year’s process, or in the mood for more suffering, I suggest starting to bet on next year’s selection. Currently the frontrunners are Zohran Mamdani and AI (again).
Happy Forecasting!
-Above the Fold
P.S. As I went back through the 2023 TIME Person of the Year market, I noticed that among the 80 options, two of them were my submissions: “Gavin Newsom” and…. “The AI Architects.” Ah, well, nevertheless.
