[link] Betting on bad futures
post by fortyeridania · 2012-09-22T15:50:22.934Z · LW · GW · Legacy · 20 commentsGarett Jones, an economist at George Mason University and guest blogger for EconLog, suggests a way for people to bet on apocalyptic events:
http://econlog.econlib.org/archives/2012/09/how_to_bet_on_b.html
The basic idea:
Suppose Alice and Bob disagree on whether the world will end a year from tomorrow, with Alice believing it will end. If she is right, then there will be no way to settle the bet, what with the apocalypse and all that. Thus there is no way for her to collect, and so she has no incentive to bet on the apocalypse, no matter how certain she is.
Or so it would seem! The way around the difficulty is simply for Alice to get her money today, and enjoy it for a year. If she turns out to have been right, then she will have been paid properly. If the world doesn't end, then of course she'll have to return the money, plus interest--plus a penalty for being wrong.
The actual terms should depend on the confidence Alice and Bob place in their respective positions.
Personal note: Several people at my place of work have told me that they are worried about the world ending later this year. They saw a movie about it, or something. So far, they have rejected my bet proposals.
20 comments
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comment by jimrandomh · 2012-09-22T17:15:55.663Z · LW(p) · GW(p)
So... the way to bet that the world will end soon is to take out loans, and the way to bet that it won't end soon is to issue them.
Hooray, the world finally set up a mainstream prediction market!
Replies from: fortyeridania↑ comment by fortyeridania · 2012-09-23T14:59:09.388Z · LW(p) · GW(p)
I would not say that betting on the apocalypse is mainstream...yet.
comment by Scott Alexander (Yvain) · 2012-09-22T20:13:08.016Z · LW(p) · GW(p)
Yet another example of the Sequences plagiarizing the future
Replies from: Eliezer_Yudkowsky, fortyeridania, magfrump, MichaelHoward↑ comment by Eliezer Yudkowsky (Eliezer_Yudkowsky) · 2012-09-25T01:09:05.348Z · LW(p) · GW(p)
Robin Hanson kinda killed it here:
http://lesswrong.com/lw/ie/the_apocalypse_bet/ekw
Did Jones answer Hanson's objection? Rereading, it seems a bit knockdown, and past-EY's attempts to evade it seem like past-EY was updating too slowly, I shoulda just said "Oops."
↑ comment by fortyeridania · 2012-09-23T14:45:24.447Z · LW(p) · GW(p)
The first commenter on Jones' post linked to that, too; I had somehow never read that post of EY's before.
Replies from: ciphergoth↑ comment by Paul Crowley (ciphergoth) · 2012-09-25T12:01:45.587Z · LW(p) · GW(p)
That was me. No reply though.
↑ comment by MichaelHoward · 2012-09-23T21:15:20.341Z · LW(p) · GW(p)
Yet another example of the Sequences plagiarizing the future
comment by brilee · 2012-09-22T18:45:26.950Z · LW(p) · GW(p)
Alice, believing that the world will end, will spend all her money by her predicted end-of-the-world date. She will then be unable to pay back. Bob, knowing this, would never lend her the money.
Replies from: Athrelon, Decius↑ comment by Athrelon · 2012-09-22T19:36:26.786Z · LW(p) · GW(p)
Alice will still have the human capital, in theory, to pay Bob back, though bankruptcy is an issue.
Replies from: Zaine↑ comment by Zaine · 2012-09-22T19:42:13.749Z · LW(p) · GW(p)
What do you mean by human capital? I imagine it involves the selling of humans in some form or other. Am I misunderstanding?
Replies from: Randaly, fortyeridania↑ comment by Decius · 2012-09-22T20:42:44.450Z · LW(p) · GW(p)
Alice secures the loan with collateral. At the end of the loan, Bob keeps the collateral.
Replies from: Oscar_Cunningham↑ comment by Oscar_Cunningham · 2012-09-22T20:54:12.622Z · LW(p) · GW(p)
But then Alice would like just as much to sell the collateral and not take part in the bet.
Replies from: gwern, Deciuscomment by DanArmak · 2012-09-22T19:52:57.980Z · LW(p) · GW(p)
Related: After the Rapture pet care