5 thoughts on “Nigel Eccles (the CEO of HubDub) and Robin Hanson (the inventor of MSR) have some explaining to make about the extreme zigzagging of the Barack Obama event derivative (in blue on this static compound chart). Look at the right end of the chart.”

1. There was a bug in that chart which is now fixed. However the excess volatility is still there. The problem is that our early markets were created with a liquidity parameter which was too low. That is fixed with more recent markets. However we are also looking at modifying the MSR in some significant ways.

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2. @Nigel Eccles –

   Thanks. Added as an update.

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3. The fact that an LMSR market is so dependent on the operator’s arbitrary choice of value for the “market depth” parameter is very disturbing.  If the operator sets it too low, we’re in zigzag country. If he sets it too high, we’re in flatland. In both cases, the operator’s arbitrary choice interferes with a process that should, ideally, be solely driven by the crowd of traders.  That’s a good reason to prefer predictions driven by continuous double auctions.

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4. Just a wild thought:

   – Could/should the prediction exchanges mask artificially this zigzagging?

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5. […] Nigel Eccles commented on Nigel Eccles (the CEO of HubDub) and Robin Hanson (the inventor of MSR) ha… […]

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