Optimization Process's Shortform

post by Optimization Process · 2020-03-14T21:15:45.536Z · LW · GW · 5 comments

5 comments

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comment by Optimization Process · 2020-03-14T21:15:45.723Z · LW(p) · GW(p)

Some wagers have the problem that their outcome correlates with the value of what's promised. For example, "I bet $90 against your $10 that the dollar will not undergo >1000% inflation in the next ten years": the apparent odds of 9:1 don't equal the probability of hyperinflation at which you'd be indifferent to this bet.

For some (all?) of these problematic bets, you can mitigate the problem by making the money change hands in only one arm of the bet, reframing it as e.g. "For $90, I will sell you an IOU that pays out $100 in ten years if the dollar hasn't seen >1000% inflation." (Okay, you'll still need to tweak the numbers for time-discounting purposes, but it seems simpler now that we're conditioning on lack-of-hyperinflation.)

Does this seem correct in the weak case? ("some")

Does this seem correct in the strong case? ("all")

Replies from: Dagon
comment by Dagon · 2020-03-15T15:25:54.029Z · LW(p) · GW(p)

Clearly not all - the extreme version of this is betting on human extinction. It's hard to imagine the payout that has any value after that comes to pass. In some, you can find the conditional wagers that work, in some you can find a better resource or measurement to wager (one gram of gold, or one day's average wage as reported by X government). In many, though, there just is no wager possible, as the utility of the parties diverges too much from the resources available to account for in the wager.

Replies from: Optimization Process
comment by Optimization Process · 2020-03-15T17:29:14.195Z · LW(p) · GW(p)

Clearly not all - the extreme version of this is betting on human extinction. It's hard to imagine the payout that has any value after that comes to pass.

Agreed that post-extinction payouts are essentially worthless -- but doesn't the contract "For $90, I will sell you an IOU that pays out $100 in one year if humans aren't extinct" avoid that problem?

Replies from: Dagon, donald-hobson
comment by Dagon · 2020-03-16T02:53:28.092Z · LW(p) · GW(p)

Small amounts and near-even-money ($90 for $100) are bad intuition pumps - this is in the range where other considerations dominate the outcome estimates. In fact, you probably can't find many people to accept only 11% for a one-year unsecured loan.

comment by Donald Hobson (donald-hobson) · 2020-03-17T21:44:54.559Z · LW(p) · GW(p)

This is exactly conditional to a bond that pays out in one year "unconditionally". Ie this is a loan with interest. (There are a few contrived scenarios where humans are extinct and money isn't worthless, depending on the definitions of those words. Would this bond pay out in a society of uploaded minds?)