We’ve considered a wide range of mechanisms and ended up most optimistic about this one.
When it comes to prediction markets on funding decisions, I’ve thought about this in two contexts in the past:
During the ideation phase, I found that it was already being done (by Metaculus?) and not as helpful because it doesn’t provide seed funding.
In Toward Impact Markets, I describe the “pot” safety mechanism that, I surmised, could be implemented with a set of prediction markets. The implementation that I have in mind that uses prediction markets has important gaps, and I don’t think it’s the right time to set up the pot yet. But the basic idea was to have prediction markets whose payouts are tied to decisions of retro funders to buy a particular certificate. That action resolves the respective market. But the yes votes on the market can only be bought with shares in the respective cert or by people who also hold shares in the respective cert and in proportion to them. (In Toward Impact Markets I favor the product of the value they hold in either as determinant of the payout.)
But maybe you’re thinking of yet another setup: Investors buy yes votes on a prediction market (e.g. Polymarket, with real money) about whether a particular project will be funded. Funders watch those prediction markets and participants are encouraged to pitch their purchases to funders. Funders then resolve the markets with their actual grants and do minimal research, mostly trust the markets. Is that what you envisioned?
I see some weaknesses in that model. I feel like it’s rather a bit over 10x as good as the status quo vs. our model, which I think is over 100x as good. But it is an interesting mechanism that I’ll bear in mind as a fallback!
We’ve considered a wide range of mechanisms and ended up most optimistic about this one.
When it comes to prediction markets on funding decisions, I’ve thought about this in two contexts in the past:
During the ideation phase, I found that it was already being done (by Metaculus?) and not as helpful because it doesn’t provide seed funding.
In Toward Impact Markets, I describe the “pot” safety mechanism that, I surmised, could be implemented with a set of prediction markets. The implementation that I have in mind that uses prediction markets has important gaps, and I don’t think it’s the right time to set up the pot yet. But the basic idea was to have prediction markets whose payouts are tied to decisions of retro funders to buy a particular certificate. That action resolves the respective market. But the yes votes on the market can only be bought with shares in the respective cert or by people who also hold shares in the respective cert and in proportion to them. (In Toward Impact Markets I favor the product of the value they hold in either as determinant of the payout.)
But maybe you’re thinking of yet another setup: Investors buy yes votes on a prediction market (e.g. Polymarket, with real money) about whether a particular project will be funded. Funders watch those prediction markets and participants are encouraged to pitch their purchases to funders. Funders then resolve the markets with their actual grants and do minimal research, mostly trust the markets. Is that what you envisioned?
I see some weaknesses in that model. I feel like it’s rather a bit over 10x as good as the status quo vs. our model, which I think is over 100x as good. But it is an interesting mechanism that I’ll bear in mind as a fallback!