Subsidizing real-money prediction markets and real-money conditional prediction markets

Should Google subsidize the Lunar X Prize contract on InTrade?

John Salvatier,

Our good friend Bo Cowgill might have already re-created those prediction markets on Google&#8217-s internal prediction exchange at a marginal cost of zero US dollar. No need for him to &#8220-subsidize&#8221- external prediction markets.

[As an appendix, I precise that I am in favor of opening the enterprise prediction markets to external traders, for some questions.]

Subsidizing prediction markets is an old Robin Hanson idea that carries quite a heavy price tag.

Conditional prediction markets is a great idea on the paper. Many people (e.g., Mike Linksvayer) like the idea. However, here is what the uncritical Robin Hanson fanboys blogging on Overcoming Whatever won&#8217-t tell you:

  • The first problem is that nobody trades those things.
  • The second problem is that subsidizing those conditional prediction markets costs an arm and a leg.
  • The third problem is that no major news media outlet has ever quoted the prediction market prices / probabilities generated by those conditional prediction markets.

Peter McCluskey could have rent a French mistress (or a French gigolo) for a full year with all the money he is spending on Robin Hanson&#8217-s idea. Or vaccinated the whole African continent against Malaria. See Peter&#8217-s comment, at the middle of the webpage, here.

Philanthropy and prediction markets are not mixing well &#8212-yet.

One thought on “Subsidizing real-money prediction markets and real-money conditional prediction markets

  1. Jason Ruspini said:

    I don’t think these subsidies need to be so expensive.  Since the sponsor is presumably interested in the question, they should have a pretty good idea where the market should open in many cases.  If they are really unsure of the initial price, they could begin with a small trade size (looser market) and increase it as the market tells them where the price should generally be.  They could also manually move the bid/ask if an easily interpretable event occurs (like right now) instead of waiting to give away money.  Obviously you don’t want to “pollute” the price too much, but there’s little reason to go completely autopilot and pay for what you already know.


    Also I think Google should stick to non-space-travel projects for now. ha

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