What is the Risk Free Interest Rate on Manifold Markets until Election Day 2024?

#Economics #Free Money #Interest Rates

100

768

Ṁ140k

Ṁ1.6k

Nov 7

chance

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This question will resolve to NO on November 6, 2024.

This exists as a baseline for other election predictions, especially ones that cannot happen - this market should trade at the same value as whether e.g. Hillary Clinton will run for president, or whether Trump will be president prior to the next inauguration day.

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Other expiration dates:
12/31/2024: https://manifold.markets/Lorxus/what-is-the-riskfree-interest-rate-2fe30d91de52?r=SGFycmlzb25OYXRoYW4
Multiple longer dates: https://manifold.markets/HarrisonNathan/what-is-manifolds-yield-curve?r=SGFycmlzb25OYXRoYW4

This is too low, but of course there's no reason to adjust it upwards

predicts NO

@Tumbles Not quite true. If you think someone will need to buy out for liquidity you could try and turn a profit. But mostly doesn't seem wise.

Related market. Funny to see how users price differently.

predicts YES

If anyone is interested in borrowing me 3k for the shirt, I would return a lot more than 1.6% :D

predicts NO

@kottsiek Are you on Discord? PM me. IsaacKing#7376

0,06 seems way too low. You can get 2-3% on practically guaranteed outcomes on shorter delivery dates.

predicts YES

@kottsiek Why not bet this market down instead? The change of this happening is basically 0. Maybe people think a random user has a 2% chance of misresolving. Or Manifold is just slightly inefficent.

@kottsiek Manifold is totally inefficient. One of many inefficiency mechanisms: profits and costs are rounded to the nearest M$, so you have to bet very large amounts of M$ to get any profit on markets with low/high probabilities.

Also, users do mis-resolve, or forget to resolve, or many other things.

@kottsiek If I bid this market to 0, will you buy it from me if I need liquidity?

@AdriaGarrigaAlonso I don't know about this rounding thing. Isn't that just an artifact of the UI? If I look at the API, profits balances are represented as floating-point.

predicts YES

@MP easier ways to make mana

predicts YES

@AdriaGarrigaAlonso forgeting to resolve will be fixed by the admins eventually (at most two weeks later in my experience) and two weeks should not really make a difference on such a long horizon.

predicts YES

@kottsiek Buying YES is definitely the more fun way! I had previously bought some low and sold it high to @EthanGlass (also thank for wishing me good luck @Gurkenglas). And honestly, I personally think another spike like that is totally possible:

predicts YES

@1941159478 Your market existing probably increased the odds by a lot. We'll see. What do you think is the "correct" annual risk free interest rate?

predicts YES

@kottsiek I guess I agree with @AdriaGarrigaAlonso that Manifold is just not that coherent. There's a bunch of markets with a resolution date way out in the future and an extreme probability. But also this:

@ScottLawrence ah that's nice, I didn't know.

@1941159478 The creator of the Trump rationalussy market hasn’t created any markets so it’s definitely not risk free, while this market is by someone who has a public image to uphold and I trust not to misresolve this type of market. I’d guess 10% is probably more accurate for the Trump market (actually I’ll go over and bet that up now).

Oh, and the creator of the Trump market has 7000 YES shares in it. Seems quite risky.

The lack of a interest rate in markets and the lack of shorting (the market on Taiwan invasion is overestimating by 2 to 3x) but at the extremes, you can only bet at the no and this means getting a 2% return many times while shorting would mean getting a 50% return. Therefore, manifold as it is will always have the inability of forecast low probability events.

bought Ṁ1 of NO

gifting 10 points for inventing this :)

@M Can you explain to me why this is cool/useful?

predicts NO

@NathanpmYoung As it allows to measure one of distortions present on markets

I can't do this now (on the road) but i remember making a scatterplot about a month ago of probability vs close time. By itself it's a crude measure---you really need to walk through and manually specify plausible resolution dates---but it looked to me like manifold betters are not consistently discounting. Election markets in particular tend invoke strong emotions. I expect many to wander outside whatever probability is provided by the and the many markets set up by Nuno Sempere. Sorry for the lack of anything quantitative. If nobody else does this by Friday, I'll fix up that scatterplot to see if this hand-waving is accurate.

Assuming people trust you, this'll get you an underestimate, since whoever estimates the risk-free interest rate the lowest will bid this market furthest down, while nobody has a reason to bid it up.

predicts NO

@Gurkenglas I think it'll get the lowest rate available, which is the market rate.

@MartinRandall it'll get the lowest rate available to whoever is worst at spotting opportunities. (Technically selling existing NO shares is a reason to bid it up - Barr and Zvi and Multicore may want to post limit orders.)

(and technically expecting other people to want to sell their NO shares before close is a reason to bid it up, good luck 1941159478 ^^)

predicts NO

@Gurkenglas Yes, it'll get the lowest rate available from whoever has the lowest opportunity cost. Which is the market rate. Which will be lower than the average opportunity cost across all bettors. Which is how markets work in general.

@MartinRandall This makes it suspect as a baseline, since if a candidate having no chance is obvious to anyone competent, that competence implies higher opportunity costs.

predicts NO

@Gurkenglas This can be fixed by some people injecting YES to balance it. I already see some.

@M Buying yes at 3% seems like a bad move because it won't pay off unless you can sell at 12%, due to fees.

predicts NO

@MartinRandall people buying yes would be not interested in profit but in better calibration of interest rate (and would be buying tiny amounts of YES)