InTrade CEO’s poodle got corrected on the concept of interpreting prediction market prices as probabilities:
-
-
LoudNotes, please contact me, I do have a vacant blog author slot to fill:
- cfm |-at-| midasoracle |.|-com-|
- chrisfmasse |-at-| gmail |.|-com-|
-
I always become a bit wary when people talk about truth and reality. Or facts.
What better way to measure reality than what we’re doing with prediction markets ?
Â
I could create a market stating “There will be at least 3 chairs standing by tomorrow”
Nobody would offer this market, or trade it, because the answer is obvious to us. Nevertheless, the price of 100% would still represent reality, our consensus reality.
Â
Obama to win the election is trading at 85%. Given that there are no price changing events expected, and given the absence of distortional factors, and given the markets are liquid mature and accurate, it could be argued that what that 85% represents is EXACTLY reality, our reality.
You may want to chew on this a bit.
Â
http://en.wikipedia.org/wiki/Reality
According to the less realist trends in philosophy, such as postmodernism/post-structuralism, truth is subjective. When two or more individuals agree upon the interpretation and experience of a particular event, a consensus about an event and its experience begins to be formed. This being common to a few individuals or a larger group, then becomes the ‘truth’ as seen and agreed upon by a certain set of people — the consensus reality. Thus one particular group may have a certain set of agreed truths, while another group might have a different set of consensual ‘truths’. This lets different communities and societies have varied and extremely different notions of reality and truth of the external world. The religion and beliefs of people or communities are a fine example of this level of socially constructed ‘reality’. Truth cannot simply be considered truth if one speaks and another hears because individual bias and fallibility challenge the idea that certainty or objectivity are easily grasped. For Anti-realists, the inaccessibility of any final, objective truth means that there is no truth beyond the socially-accepted consensus. (Although this means there are truths, not truth).