Comment by Tripp Lyons (tripp-lyons) on No, the Polymarket price does not mean we can immediately conclude what the probability of a bird flu pandemic is. We also need to know the interest rate! · 2025-01-12T00:00:52.436Z · LW · GW

I've thought about this before, and the solution I came up with is to denominate the bets in short term treasury bonds instead of dollars.

Comment by Tripp Lyons (tripp-lyons) on What is the alpha in one bit of evidence? · 2024-11-21T23:30:42.844Z · LW · GW

Let's say the market prices in a 0.1% chance of extinction per century, and you think there's a 50% chance we're dead in the next 25 years. This is about 12 bits of evidence.

Where did the 12 bits number come from? I'm getting $lo{g}_2\left(0.5/0.001\right)+lo{g}_2\left(100/25\right)\approx 11$ bits.

Edit: I think it comes from the odds ratio: $lo{g}_2\left(999/1\right)+lo{g}_2\left(100/25\right)\approx 12$ bits.