Prognootling refers to a small-group or two-person decision made via a wager. It's based on the idea of decision markets, aka futarchy. In its simplest form, we make a single conditional prediction market: "if we take action A, will good thing G happen?". If the probability of G is high enough, we deem A to be a good idea. Importantly, we commit ahead of time to taking action A if and only if the market probability exceeds an agreed threshold. If we don't, because it doesn't, we void the market.
Warning: there are ways for that to be wrong! But we have case studies, pre-Manifold, of it working correctly -- things like the time @bethanysoule and I decided whether to risk destroying our car.
Here's an illustrative scenario:
Yesenia and Noah are partners who have a standing handshake agreement to buy mana from each other at face value. One day a stranger offers to sell them some magic beans. Yesenia thinks she and Noah should buy them and that a magic beanstalk will totally sprout. Noah says, "uh, no". They agree on a utility function over the possible worlds (wasted money, golden harps, angry giants), multiply everything out, and conclude that if the probability of a magic beanstalk is at least 20%, the beans are worth a shot. It's that probability that Yesenia and Noah disagree about.
Off to Manifold!
They create a market: "If we buy these magic beans, will we get a magic beanstalk?" ๐น
The market price starts at 50%, implying magic beans, go!
Noah spends a trivial amount to drive the price down to 19% (๐ซ๐)
Yesenia puts in a big limit order for YES at 20% (๐ซ๐)
Noah buys NO, eating as far into Yesenia's YES limit order as he dares
Maybe he ends up happily hedged: the price stays at 20%, they're buying the beans, but if the beanstalk fails to materialize, he'll be made whole
Or maybe he eats through Yesenia's YES limit order and puts up his own: NO at 19% (๐ซ๐ again)
Yesenia can now counter or not
The price tug-o-war continues until they're both happy ๐ช๐๐ช
They do what the market dictates ๐
Again, doing what the market dictates means that (a) if the price ends up below 20% then they don't buy the magic beans and the market resolves N/A and no money changes hands; and (b) if the market price ends up 20% or more then they do buy the magic beans. In that case they then wait to see if the beanstalk appears and resolve the market YES or NO accordingly.
If third parties show up and place bets, Yesenia and Noah shouldn't mind as long as they have their tug-o-war at 19 and 20%. If they let the price bounce up and down, that could create an arbitrage opportunity for third parties.
But what if Manifold is full of magic bean skeptics and the market price immediately plummets to 5% and Yesenia doesn't have the capital to buy the price up to 20%? Noah gets his way -- no magic beans -- with no mouth-money needed. One answer is to bite that bullet and say this only improves the situation. The market price is more accurate and Yesenia gets a better deal on her YES shares if she does move the price up. Maybe that's even more ROI-positive from her perspective than the beans! But if Yesenia and Noah don't like that, they can always make the market unlisted.
Markets exemplifying this protocol
(additional examples to be added here as we collect them)
Resolution Criteria
Point to examples in the comments. I'll review them and add them to the above list if I agree that they count. The market resolves to the number we've collected as of market close 6 months from now.
FAQ
1. Do instances in the past count?
No, starting today. But please point out any older instances you know of in the comments anyway!
2. Do they have to be on Manifold?
No, but it has to be on some platform that's enough like Manifold that you can click a link and confirm that it played out according to the protocol described here.
1,000
3.00More examples of doing this pre-Manifold: deciding whether to let our kid mix a glass jar of peanut butter by bouncing it off the couch, deciding whether to drive to a remote hike in a car that was being flaky about starting, deciding whether to submit a Manifund entry to build a prognootling app.
I think the above counted. It was for deciding whether it was ok for our 14-year-old to go ice skating with a broken arm. We picked a threshold probability for "bad thing happens if we do this dangerous thing" and hit that threshold and made the decision based on it. Namely, we deemed it sufficiently unlikely that anything bad would happen. The unusual part was that all the actual stakeholders in the decision (us, the parents, plus the kid) ended up betting in the same direction, in a tug-o-war with third parties who may have been mildly scandalized by our laissez faire parenting. We didn't expect that, and I think @bethanysoule would've bet on "eek yes the bad thing might happen" if the Manifold community didn't jump all over that before she had a chance.
Great questions from @CliveFreeman about things I breezed over in the description here. One is whether the specific market price (20% in the magic beans example) matters or if it's just about who bets more for their position. Another is whether it's fair that whoever has the most mana can ensure they get their way.
My answer is the 20% is indeed critical. The assumption is that we did the expected utility calculation and computed 20% as the threshold above which "do the thing" becomes a good idea, positive EV. Noah can have ten times as much mana on NO as Yesenia has on YES but if the price hits that 20% mark, they're buying the magic beans.
And the reason all this is fair is that Noah truly believes the probability is <20% and so he should be happy to keep buying NO shares. It's possible he gives up for lack of capital or due to risk aversion and that a non-market-based solution where he vetos the magic beans by being more adamant is better. But what if Noah and Yesenia are equally adamant? This is a more principled way to decide, and it has the advantage that if Noah does lose because he maxed out his capital or his risk tolerance, at least he'll be getting what's to him a hefty payout along with his told-you-so.
In short, "whoever has more mana wins" is no worse than "whoever is louder wins". Especially when those proven wrong pay those proven right. Making decisions this way is self-correcting!
What we ideally want is to say "whoever is more certain wins" and this is, I think, the closest we can get to that in reality.