Would Self Resolving markets with dynamic caps on bets help make self resolving work better?
resolved Dec 3

Idea: self resolving markets would involve some function that calculates the max size of bet you're allowed to make, helping ensure that your trades are more effective at finding a ground truth schelling point.

For example: everyone would be allowed to bet at most 100 * traders in a market.

As # of traders increase, so is the max someone is allowed to directionally bet in the market.

The 100 per trader could be configured per market. This would help ensure whales can't artificially dominate the market, but at the same time ensure those serious about the market can participate to a greater degree than those who are not.

Another example: depending on the number of unique upvotes you get for a comment in that market (plus some fraction of comments in all markets) would increase the cap on any potential bet you make.

Or perhaps you are capped by the number of times you correctly win in markets.

Or, some combination of the above plus others. To be configured and weighted by the market creator.

Resolves to yes if % >= 50 on close, otherwise no.

PLEASE NOTE: I will resolve based on the current price at a random time in a 24h period before the end date to reduce manipulation. The random stopping idea is from this paper - https://arxiv.org/abs/2306.04305

Please explain your reasons why you make a trade in this market.

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Is this resolved based on market price at close?

predicted YES
predicted YES

Another idea for a factor cap markets would be backwards looking reviews of expired markets. If there is overwhelming community consensus that a market was resolved in bad faith, this would be a strong cap on anyone who bet large in that direction.

Having a multitude of different variables to dynamically calculate the cap someone might be allowed to bet in a self resolving market would signify the weight of their ability to influence its outcome.

Thus the weighted average of the signals should indicate the predictive accuracy and credibility of these bettors.

Schelling points have been proven to be quite effective, and can work for prediction markets. This is because you naturally want to be rewarded and you do this by betting for what you think will be the winning side.

They are at risk however when 'whales' can dominate them by controlling their outcome to something artificially true. By capping the amount allow to be bet per trader, it makes it more democratically, and then by dynamically allowing that cap to increase ensures that serious traders will be able to more effectively contribute to a market.