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Will Augur be the first successful decentralised prediction market?

atroche          30 October 2015 12:24 AM


Augur is a work-in-progress decentralised prediction market. It recently raised over five million dollars in a crowdsale, and it lists Robin Hanson as an advisor. Its creators expect to launch it in Q1 2016.

Its main critic is Paul Sztorc, Yale statistician and inventor of Truthcoin, who also intends to create a decentralised prediction market. He lays out much of his argument against Augur here:
http://www.truthcoin.info/faq/.

So, do you think Augur will be a functioning, active market in a couple of years time?

More reading:

http://www.bloomberg.com/news/articles/2015-09-18/these-two-projects-are-racing-to-bring-election-gambling-back-for-2016
https://en.wikipedia.org/wiki/Augur_(software)
https://en.wikipedia.org/wiki/Ethereum



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is4junk 3 November 2015 04:46 PM
68%

I keep thinking about how to exploit an Augur like system if it became mainstream. Could use it as a sort of push-poll combined with mega-jackpot?

The basic idea would be to try to raise awareness (break the media silence) on certain topics. For instance, (again assuming Augur was mainstream) the republican candidates could encourage betting that "Hillary will be indicted" where the goal isn't to win but to raise awareness of the case against Hillary. The candidates might encourage this over giving directly to the campaign. People would be buying and selling and be interested in the latest emails.

Democrats could also play the same game like "Guess the Gun Deaths this year - will there be more then X gun deaths this year?". Then encourage donors to buy contracts for unrealistically high deaths. Again the idea wouldn't be to win but to raise awareness.

A futures market would be needed to really get high payouts to make it newsworthy.


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atroche 5 November 2015 02:52 PM
73%

Do you think their plan might backfire, because anyone looking will see how low the odds are? Even if a large number of donors are willing to take bad deals, eventually the price is going to settle on the likely outcome. They'd probably be better off buying traditional advertising, don't you reckon?

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is4junk 5 November 2015 05:00 PM
66%

If you are a true believer then you think that if enough people find out it will change the outcome. Advertising isn't enough since you want people to actually care about the message. For instance, if you bought shares of "Hillary to be indicted" for 5 cents and then after a batch of emails are released and it is selling for 7 cents - you would need to investigate further to decide to take your 40% profit. Then you can brag about making money off it generating more interest.

Now if you can sell futures on the indictment instead of making 40% profit you could make 400% assuming you timed it right.

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ChristianKl 6 November 2015 03:15 AM
65%

I don't think the most is to be gained from trying to push number to an unrealistic high.

There more to be gained by focusing on a statistic that actually has a reasonable probability but that's not in public attention.

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is4junk 1 November 2015 09:04 PM
68%

Not sure if Auger will be the first successful one or not.

Could Auger be used to make sophisticated high payoff / low odds predictions? If it could be the back end for a fantasy football prediction system - then it might be able to branch out and take-off. Otherwise, I wonder if there is a large enough market for them during non-election years.


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atroche 2 November 2015 07:55 PM
75%

Good point. But how do you explain the popularity and financial success of Intrade in non-election years?

On the topic of sports, it's unclear whether Augur will be able to provide a cheaper / faster alternative to sports betting. But if it were able to capture even a small portion of the global market, it'd be much bigger than Intrade ever was. Can anyone weigh in on the feasibility of that?

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VoiceOfRa 30 October 2015 06:13 PM
66%

Previous prediction markers failed due to being shut down by the US government under anti-gambling laws. What will Augur be any different?


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atroche 30 October 2015 09:43 PM
75%

The key difference is that there's no single organisation which handles the operation of the market (including the transferring of funds). It's distributed across the entire Ethereum network, which should (in theory) be as hard to shut down as Bitcoin.

Here's a snippet from a relevant blog post: “The law does not prohibit the creation of open-source, decentralized prediction market software, nor the distribution of of cryptocurrencytokens.”

Still, it's very hard to tell, because this is fairly new legal territory. What's your take on it?

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VoiceOfRa 31 October 2015 10:28 AM
66%

In that case, who's in charge of judging predictions true or false?


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ChristianKl 2 November 2015 04:20 AM
61%

Betting on elections seems pretty simple but as soon as we bet on events such as: "Assad is going to use chemical weapons", the issue becomes more complicated.

Some Rep holder might vote "Yes", others "No" and even others "Indeterminate".

Cases like that will likely produce a lot of drama.
I however see no real reason why the system shouldn't work.


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atroche 2 November 2015 07:48 PM
74%

If an event is marked as indeterminate by enough people, the event creator loses the bond (and the reporters who reported it as indeterminate get rewarded). This is a strong incentive to specify events properly.

Besides that, less people are going to participate in markets around poorly specified events. I mean, would you put money into a market based on the truth value of “Assad is going to use chemical weapons”?

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ChristianKl 3 November 2015 05:10 AM
63%

The problem is not that usage of chemical weapons is unspecific. The problem is that it's difficult to prove that it happens and I think there are many cases where people care about political predictions but underrate the extend to which it will be controversial whether an event happened.

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