Will Manifold do something to incentivize participating in long term markets in the next 30 days?

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resolved 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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predicted NO

Made a followup market: https://manifold.markets/SneakySly/will-manifold-do-something-to-incen-5786c1ff0b95

predicted NO

Safe to say nothing was done to solve this yet.

What about compound interest? It's a standard mechanism to incentivize people to buy long-term instruments. Essentially, the principal and all payouts would get compounded yearly or something.

@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

I think the loans idea that was discussed about a month ago is great, I hope it gets implemented sometime soon!

predicted NO

@jack It was implemented and killed.

@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

predicted NO

@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.

predicted NO

@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.

bought Ṁ6 of NO

They even killed loan feature after implementing it...

bought Ṁ100 of YES

Lots of chatter on Discord about this, probably would be better discussed as a long term markets group in the discussion tab. Sounds like James is intent on implementing something