The Summoned Heroine's Prediction Markets Keep Providing Financial Services To The Demon King!

post by abstractapplic · 2024-10-26T12:34:51.059Z · LW · GW · 4 comments

Contents

  The Summoned Heroine and the Demon King
  The Demon King and the Trusted Lieutenant
  The Summoned Heroine and the Stalwart Sidekick
  The Demon King and the Summoned Heroine
None
4 comments

The Summoned Heroine and the Demon King

The Summoned Heroine announced to the Circular Citadel that she would be creating a prediction market, to help them anticipate and counter the Demon King’s next moves. There was cheering, on general principles.

The Demon King donned a mortal guise, bought shares in “The Demon King will attack the Frozen Fortress”, and then attacked the Frozen Fortress.

---

The Summoned Heroine announced to the Circular Citadel that, due to recent events, strict limits would be imposed on how much any individual would be permitted to invest in the prediction markets. There was only slightly less cheering.

The Demon King donned a series of mortal guises, bought shares in “The Demon King will attack the Frozen Fortress”, and then attacked the Frozen Fortress.

---

The Summoned Heroine announced to the Circular Citadel that, due to certain unforeseen difficulties, their taxes would now only be seeding trades which wouldn’t subsidize the Demon King’s attacks. There was some cheering.

The Mercentile Monarchs didn’t share a border with any Demonic territories, and didn’t care who won the Summoned Heroine’s war, but did want accurate predictions so they could accurately plan trade routes. They noticed that the Heroine had generously funded half of a fair and fully-liquid prediction market, and sensibly seeded the remaining outcomes.

The Demon King donned a mortal guise, bought shares in “The Demon King will attack the Frozen Fortress”, and then attacked the Frozen Fortress.

---

The Summoned Heroine announced to the Circular Citadel that, as a result of stringent regulation and intense diplomatic efforts^[1], it was now completely impossible for the Demon King to make any money predicting anything other than failures by Demonic forces, and that furthermore, the payouts for such failures could not exceed the monetary value of the relevant losses to the Demonic Kingdom. There was a little cheering, mostly motivated by concern about what might happen if someone using that many italics expected cheering and didn’t get it.

The Fair Prince gently reminded her that the status quo she’d been summoned to improve upon was that the Circular Citadel paid the Demonic Kingdom an exorbitant annual tribute to not attack them. He politely inquired as to how paying them to launch failed attacks was an improvement, since (to his admittedly untrained eye) the main change was an increase in the amount of horrific violence involving Citadel citizens.

There was an awkward silence. It was broken by the arrival of two messengers. The first bore a missive from the Demon King, which read “Thanks for the insurance policy! :P”. The second informed the Heroine that Demonic forces were once again attacking the Frozen Fortress.

The Demon King and the Trusted Lieutenant

“My liege, a moment of your time?”

The Demon King looked down from her^[2] throne, favoring her Trusted Lieutenant with an impish smile. “Oh hey, it’s you! What’s the news on Operation Stuffed Pig?”

“It was . . . a partial success, my liege. The early stages worked exactly as you said: conditional prediction markets are cheap to manipulate, especially when the conditions being conditioned upon are considered unlikely. We managed to distort P(successful invasion | # of Citadel battalions present) markets for the Fertile Farmlands with minimal expenditure, and without alerting the enemy: the Citadel redeployed away from our targets, just as we hoped.”

“But?”

“Several of our assaults failed outright, even when facing vastly inferior forces; and of those which succeeded, most experienced an unexpectedly high level of casualties. Our best hypothesis is that enemy soldiers took the markets’ predictions of their invincibility as gospel, and this caused them to fight with unprecedented fierceness and tenacity.” A pause. “If it’s any consolation, our proxies did net a profit from their investments.”

The Demon King sighed. “Ehh. You pay to win some, you get paid to lose some. How’s prep for the next Fortress attack going?”

“All troops suspected of sedition have been allocated to the front lines, along with all troops suspected of loyalty intense enough to make them unpredictable. All siege equipment capable of breaching the secondary walls has been dismantled, sabotaged or sold to third parties. Our battle plan has been successfully ‘leaked’ to the enemy, and ‘their’ spies have been able to claim significant ‘operating expenses’."

“Any chance we might win anyway?”

“None whatsoever.”

“Sweet! Alright, dismissed.”

The Trusted Lieutenant bowed stiffly and made to depart the Demon King’s throne room.

“Wait, un-dismissed. You came here to say a thing. What’s the thing?”

“Ah, that. My liege . . . you will, of course, recall the markets the Heroine set up for predicting which nobles and royals would be kidnapped?”

“Uh huh.”

“And you will recall that your stated policy on this was ‘buy all the zero-kidnappings bonds, I hate taking hostages, those clowns in the dungeons keep forgetting human prisoners can’t drink lava’.”

“Yeah?”

“Well, the bonds count all kidnappings, not just the ones we perpetrate. And recent intelligence indicates that the Cunning Count is planning to abduct the Fair Prince.”

“The Heroine put him up to it? Cheated her precious markets just to screw with me?”

“Not that we know of, my liege. As far as we can tell, his motivations are personal.”

“Oh,” said the Demon King, trying her best not to seem disappointed and almost succeeding. “So why haven’t you . . . ?”

“Our agents are in position. I just thought it prudent to confirm with you before actively helping our mortal enemies nullify a distraction, avoid a scandal and maintain internal cohesion.”

“Okay, props for checking, but like half our treasury is tied up in those bonds. Go ahead and foil his plot.”

“It shall be so, my liege.”

The Summoned Heroine and the Stalwart Sidekick

“I mean it’s just obscene!” said the Summoned Heroine as she paced. “People don’t do this!”

Her Stalwart Sidekick nodded sympathetically, and attempted to console her. “For what it’s worth, your markets are workin’ pretty well, now we know how to use ‘em. We buy we’ll-win-this-battle bonds, morale goes up, win chances go up, and then because win chances went up we also usually make money on ‘em. Profit and propaganda in one! Even the Prince is startin’ to come around!”

“Markets aren’t for that! I just wanted to make good decisions! And meanwhile, she . . .” The Heroine trailed off, and then trailed back on. “. . . it’s like she’s got some kind of vendetta against market solutions to epistemology! Like it’s her purpose in life to make prediction markets look stupid, even when it doesn’t make sense or benefit her! And she just keeps attacking that Fortress!”

“Well, demons are known for messin’ with people. And I hear their politics get freakin’ weird, even by politics standards.”

The Heroine ignored this. “This world . . . you had gambling dens already, you had insurance policies already, you had loans and mortgages already. It’s not like I was adding anything qualitatively new!”

“Changin’ quantities changes qualities. And people know to look with fresh eyes when a Summoned Hero sets their heart on somethin’.”

The Heroine ignored this too. “Earth even had stock markets! They’re almost exactly equivalent to prediction markets!! And this didn’t happen there!!! You can’t even say they weren’t subsidized, not exactly, it’s not like there weren’t bailouts! But people didn’t short a company and secretly poison the CEO! Dictators didn’t threaten to invade their neighbors, surreptitiously buy stock in their neighbors’ companies at a depressed evaluation, and then fake a change of heart! Banks di-”

“You sure ’bout that?”

The Heroine did not ignore this. “What are you getting at?”

“I mean, y’did say secretly and surreptitiously. How d’you know that stuff wasn’t happening, and the Demon Kings in your world weren’t just better at hidin’?”

The Heroine paused for a few seconds. Then, she picked up a pillow, buried her face in it and screamed her lungs empty.

The Demon King and the Summoned Heroine

“I give up.”

The Demon King regarded her guest. “You’re surrendering? Like, on behalf of the Citadel? Or is this just you switching sides?”

“What?” replied the Summoned Heroine. “No. I mean . . . I’m giving up on decorum, on markets, on . . . things making sense, I guess.”

“I mean, I’m always happy to learn I’ve driven a rival to madness, but is there a reason you’re telling me this?”

The Heroine looked her archenemy in the eye. “I’d like to offer you an insurance policy. I don’t know why you keep attacking the Frozen Fortress, but it’s shredding your army even as it’s draining our treasury and making me look insane. So I’ll pay you, directly, to keep failing. Cut out the middleman, zero the transaction costs.”

The Demon King gave her an incredulous look. “Wait, back up. You don’t know?”

“Enlighten me.”

The Demon King adopted a tone the Heroine distantly remembered using to explain fractions to her little brother. “Hell . . . is warm. Like, proverbially uncomfortably warm. And the Frozen Fortress . . . is cold. And controlling it gives you control over a lot of land which is also cold. So – even though I don’t have a snowball’s chance of taking it or a snowflake’s chance of holding it – if I don’t keep attacking it, I get deposed for not giving my subjects excuses to hope. And if I don’t get money for doing that, I get deposed for failing definitively at something important, for not being sneaky enough, and for running out of money. Also it’s basically a trashcan for my internal opposition.”

“Oh. So you’re not doing this because you’re obsessed with me or my ideas,” said the Summoned Heroine, trying her best not to seem disappointed and almost succeeding. “Wait, so if we just leased you the Fortress, then . . .”

“We’d use it as a forward base to wreak untold horror and destruction on the rest of the continent until all the humans got together to push us out,” replied the Demon King promptly. “And if you leased us the land around it we’d use that plus dark magic to subvert the Fortress. And the Citadel know that, so they wouldn’t let you. And none of that matters to me because my throne room has air conditioning.”

“Okay.” The Heroine paused to digest this. “Okay. So . . . should we start talking terms for the insurance policy?”

The Demon King thought for a moment. “If you make it that easy, I’ll stop seeming irreplaceably conniving, and I might get edged out by someone who cares about winning, which isn’t something either of us want. But what you can do is keep doing new things which make sense on paper, and I’ll keep finding ways to use them as reasons to attack the Fortress.”

The Heroine stared off into space. “You know, it’s funny. When I was first summoned, I talked to all the Citadel’s neighbors, trying to build alliances. None of them offered me anything but obvious advice and empty flattery. I needed to threaten some of them so they wouldn’t actively support literal embodiments of evil for profit. And now . . . the one ruler willing to work with me against the Demonic Kingdom is the Demon King.”

Another incredulous look. “You think anyone’s more invested in fighting a country than the one running it?”

The Heroine ignored this. “The markets . . . did something markets are supposed to. They kept you in power. They made it so the sociopath at the top of the pyramid was the kind that’s clever and myopic and numerate and invested in the status quo. Not some crazed, bloodthirsty gloryhound; not someone who’d burn the world for a doomed ambition; not someone who destroys by mistake, or just for the sake of it. And I’ve faced a lot of your potential replacements in battle, so I know they’d have been worse.”

“. . . you’re not wrong about that. Thanks for saving me, Heroine.”

1. ^{^}

   She didn’t notice her hand drifting to her Magic Sword’s sheath as she said this, though onlookers did.

2. ^{^}

   Demonic culture considers ‘Demon King’ a gender-neutral title.

4 comments

Comments sorted by top scores.