Imagine that there is a prediction market which has been created using bimetallism of some sort, meaning there are different payouts for different types of questions.
Higher quality questions get a higher payout, either with an X return or you get special, "gold," coins which have an exchange rate of X over, "bronze" coins which you use to invest in markets.
Let's abstract away the details of what it would take to make a high quality vs. low quality market for the time being, as well as the currency exchange or bonus rate itself.
Please let me know your preferences as to how you would like such an imaginary market to be structured.
1,000Like in any market, there is a liquidity premium and an obscurity discount. The market will actively price these premia and discounts. Same as mortgage derivatives. The wider and easier a currency trades, the higher its value.
@PGeyer Good point. Just a thought dump here...What have been some of the risks and challenges associated with pricing mortgage derivatives? Likewise, what are the risks or challenges associated with actively pricing these premia and discounts in a prediction market (or across different prediction markets)? What are we solving for? Is the objective to be as free market as possible, to have the most participation possible, to have the lowest brier score (even if that means manipulating what the brier score means), or does it mean to make the best predictions, to elicit knowledge from the marketplace, resolve disagreements?
@PGeyer Also on the topic of obscurity, I had attempted to ask this question as a market previously, using Metaculus as a more concrete example (because I thought just making everything abstract wouldn't make for an interesting market) and it has been very obscure with only one trader. So the topic of pricing markets it seems is very illiquid in it of itself, funny enough. https://manifold.markets/PatrickDelaney/manifold-manametaculus-points-cappe