The betting thing is annoying, yeah. It’s not actually a great way to get at the truth either. Either the bet is for trivial sums, in which case it’s hard to take it seriously, or it’s for real money but then both parties have a serious incentive to try to set the most unfavourable odds they can for the other party. I was challenged a few days ago on this very forum to bet on whether or not I thought FTX had committed fraud by transferring customer funds to Alameda (I thought they had, some people wanted to take the other side—turns out I was right but hey!).
I responded that we could bet £10k at evens, to which someone replied “I thought you were more confident than evens”. Well, yes, if we’re going to bet for proper money of course I’m going to try to negotiate the most terrible odds for you I possibly can, why in god’s name why I would name a fair price?????
I think the dynamic you describe where betting for real money “incentives [people] to try to set the most unfavourable odds they can for the other party” is correct, but also good. Two rational actors will only engage in a bet if they believe it is +EV for each of them. In a zero sun bet, this is only possible if each actor assigns sufficiently different probabilities to the event in question. So actually in the case you described about the £10k bet, useful information was conveyed. You demonstrated that you were not sufficiently confident in your claims to offer better odds (ie. you didn’t think offering better odds would be +EV for you), which is fine. Obviously if you aren’t a frequent bettor, you have to be more worried about variance (getting unlucky and losing a bunch of money on a good bet that you’ll never recoup), but in general bets are actually good at teasing out someone’s probability distribution for an event occurring, and the dynamic you describe is an important part of that.
well obviously I could have offered way better odds (probably up to 50-1!) and it would have been +EV for me still, but I didn’t because I wanted to get the best possible price and assumed my opponent might engage in some negotiations (which they did not). So no, no useful information was conveyed other that I though there was a small chance my opponent on the other side of this hypothetical bet might have been dumb enough to take it at that price.
FWIW I think that people (such as myself) who were not willing to bet did so because by the time we came back to the bet, we had already updating to you being more correct. So the bet offer did transmit meaningful information, namely that you were correctly confident before the crowd.
The betting thing is annoying, yeah. It’s not actually a great way to get at the truth either. Either the bet is for trivial sums, in which case it’s hard to take it seriously, or it’s for real money but then both parties have a serious incentive to try to set the most unfavourable odds they can for the other party. I was challenged a few days ago on this very forum to bet on whether or not I thought FTX had committed fraud by transferring customer funds to Alameda (I thought they had, some people wanted to take the other side—turns out I was right but hey!).
I responded that we could bet £10k at evens, to which someone replied “I thought you were more confident than evens”. Well, yes, if we’re going to bet for proper money of course I’m going to try to negotiate the most terrible odds for you I possibly can, why in god’s name why I would name a fair price?????
I think the dynamic you describe where betting for real money “incentives [people] to try to set the most unfavourable odds they can for the other party” is correct, but also good. Two rational actors will only engage in a bet if they believe it is +EV for each of them. In a zero sun bet, this is only possible if each actor assigns sufficiently different probabilities to the event in question. So actually in the case you described about the £10k bet, useful information was conveyed. You demonstrated that you were not sufficiently confident in your claims to offer better odds (ie. you didn’t think offering better odds would be +EV for you), which is fine. Obviously if you aren’t a frequent bettor, you have to be more worried about variance (getting unlucky and losing a bunch of money on a good bet that you’ll never recoup), but in general bets are actually good at teasing out someone’s probability distribution for an event occurring, and the dynamic you describe is an important part of that.
well obviously I could have offered way better odds (probably up to 50-1!) and it would have been +EV for me still, but I didn’t because I wanted to get the best possible price and assumed my opponent might engage in some negotiations (which they did not). So no, no useful information was conveyed other that I though there was a small chance my opponent on the other side of this hypothetical bet might have been dumb enough to take it at that price.
FWIW I think that people (such as myself) who were not willing to bet did so because by the time we came back to the bet, we had already updating to you being more correct. So the bet offer did transmit meaningful information, namely that you were correctly confident before the crowd.