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@deagol I feel like you may not understand what arbitrage is? The bot is functioning exactly as intended. It identifies irrational spreads between markets and bets in such a way as to make a guaranteed profit across both.
@IsaacKing i know what it is, i just feel at some point buying the long leg of the spread makes no sense, in other words the short alone is already a near risk free arb
@deagol I’m sure there’s been to s of test made, but say there’s two markets “2+2=5” one at 1% the other at 2%, arb bot would buy the former and sell the later, I say short both.
@deagol That's not arbitrage though. I agree it makes perfect sense to short both but this bot purely makes arbitrage trade.
@deagol You seem to be referring to the fact that markets on Manifold are biased towards 50% due to low liquidity and transaction and opportunity costs. That is indeed something that bots can turn a profit on, but it's unrelated to the concept of arbitrage.
@IsaacKing No, really, I get how this kind of pure arbitrage works but there’s other, more fundamentally informed kinds, and my point was those can be more profitable sometimes. All I said was “something not right” about buying Y here at 7% (which is nowhere close to the extreme levels where the distortions you mention usually occur). But yeah, I shouldn’t have called out the bot, it’s doing it’s thing as intended, my bad.
This market is being arbitraged with the other one so "The intent of this market is that you can bet without influencing who wins." doesn't work. It might work better if the markets were slightly different, maybe there's a 5% chance of resolving to a random outcome, or maybe it resolves to the average probability instead of yes/no
@jack I fundamentally don't think the two markets are the same. This one is just about who will win basically. the other one talks about averages. i agree they are related but setting an arbitrage bot between them isn't correct.
@MarcusAbramovitch I thought similar but didn't say anything, but notice the arbitrage bot has been out of money for a day now...
@Mira It may be out of money for now, but it's guaranteed to turn a profit once the markets resolve, that's how arbitrage works.
The fact that people have an additional incentive to change a market's probability doesn't change the basic market math. If you think the market has a 60% chance of resolving YES, it's positive expected value to bet it up to 60%. What the other participants are doing is irrelevant.
@MarcusAbramovitch This market's resolution criteria states it resolves the same as the other one. So they are the same.