This is great; I’ve used it a few times over the past month and it’s been interesting/helpful!
Here is a suggestion for a very similar tool: I would love to use some kind of “arbitrage calculator”. If I think that two markets with different prices have substantially the same criteria (for example, thesethreemarkets, which were priced at 24%, 34%, and 53% before I stepped in), obviously I can try to arbitrage them! But there are many complications that I haven’t been able to think through very clearly:
One market might be much smaller than the other, so betting 100 mana would push the probability much further in one market than the other. Do I arbitrage by betting equal amounts of mana in both markets, or betting to move the probabilities by equal amounts (surely not), or some intelligent mix of the two?
How should I bet if I spot an arbitrage opportunity where the criteria are (inevitably) ALMOST the same, but not exactly the same? Say the two prices are separated by 25 percentage points, but I think the difference in resolution criteria only justifies a 5 percentage point difference? (Or the same problem in reverse—spotting two similarly-priced markets where I think there should be a larger difference between them.)
What if I am not just purely arbitraging, but also have a my own inside view about what the true probability should be? There must be some optimal way to make a semi-hedged bet that maximizes my profits! But I don’t know enough about finance to begin to figure out what this might be...
If you added this capability to manifolio, I feel like I would use it all the time! Having an arbitrage calculator might help create more liquid markets in manifold, by helping unify markets on related topics and generate more consistent probabilities.
This is great; I’ve used it a few times over the past month and it’s been interesting/helpful!
Here is a suggestion for a very similar tool: I would love to use some kind of “arbitrage calculator”. If I think that two markets with different prices have substantially the same criteria (for example, these three markets, which were priced at 24%, 34%, and 53% before I stepped in), obviously I can try to arbitrage them! But there are many complications that I haven’t been able to think through very clearly:
One market might be much smaller than the other, so betting 100 mana would push the probability much further in one market than the other. Do I arbitrage by betting equal amounts of mana in both markets, or betting to move the probabilities by equal amounts (surely not), or some intelligent mix of the two?
How should I bet if I spot an arbitrage opportunity where the criteria are (inevitably) ALMOST the same, but not exactly the same? Say the two prices are separated by 25 percentage points, but I think the difference in resolution criteria only justifies a 5 percentage point difference? (Or the same problem in reverse—spotting two similarly-priced markets where I think there should be a larger difference between them.)
What if I am not just purely arbitraging, but also have a my own inside view about what the true probability should be? There must be some optimal way to make a semi-hedged bet that maximizes my profits! But I don’t know enough about finance to begin to figure out what this might be...
If you added this capability to manifolio, I feel like I would use it all the time! Having an arbitrage calculator might help create more liquid markets in manifold, by helping unify markets on related topics and generate more consistent probabilities.