Will Manifold do something to incentivize participating in long term markets in the next 30 days?
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300Ṁ2489resolved Jul 24
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Resolves NO if at resolution nothing has been done to incentivize participating in long term markets.
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Made a followup market: https://manifold.markets/SneakySly/will-manifold-do-something-to-incen-5786c1ff0b95
@athenaciara I think it makes far too small of a difference to really matter
Let's say I have M$100 and I think I can bet it to make an average of M$5 in profits on any given market. If I bet in a series of markets that each last a week, then over the course of 52 weeks in a year, I can make 52 * 5 = M$260 in profit (and I'm ignoring the fact that my profits compound over time, which would potentially let me make even more profits).
On the other hand, if I bet my M$100 in a single market that lasts for a year, I get M$5 in profit. Now, let's say the year-long market pays 10% annual interest rate (which would be pretty high by comparison to the financial markets). Then I get an additional M$10 in interest, for a total of M$15. This is nothing compared to the M$260 from making 52 week-long bets.
Link to some previous discussion on it: https://manifold.markets/jack/how-should-manifold-encourage-tradi#answer-4
@M You're talking about loans v1 (M$20 loan per market) which was added and removed some months ago. There was a loans v2 proposal (loan back a percentage of your investment every week) which is still a draft: https://github.com/manifoldmarkets/manifold/pull/588
@jack You can increase the interest to something meaningful and reflective of the opportunity cost!
@MP In theory yes, but in practice I doubt it. If you use the numbers from my example, you'd need interest rates of 200%+. That's insanely high. And it doesn't incentivize good bets - if you are getting massive 200%+ interest rates, then you don't need to make a good bet in a long-term market, you just need to make any bet and you'll get a pretty decent return.
Reducing the capital costs i.e. increasing leverage i.e. loans seems like a much more effective way to achieve what we want, and it's incentive aligned - you get the same profits, but you don't have to lock up as much capital to do it.
The way I think of it is, your opportunity cost is the amount of M$ you invest times length of time it's invested. Putting M$100 into a year-long investment is 52x the opportunity cost of putting M$100 into a week-long investment. Loans help reduce the opportunity cost for longer duration markets to make this less bad.
@jack The opportunity cost is lower than that. You'll lose money is many bets. The way I see it is that all bets should have interest, but it should be higher to longer term bets.
@bcongdon sure, but I don't think there's enough mana in this market to meaningfully incentivize someone to implement it
And this is the opposite to how feature markets work, right?
https://manifold.markets/Gurkenglas/suggest-features
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