“Long Bets As Charitable Giving Opportunity”, 2017-02-24 (; backlinks):
Evaluating Long Bets as a prediction market shows it is dysfunctional and poorly-structured; despite the irrationality of many users, it is not good even as a way to raise money for charity.
Long Bets is a 15-year-old real-money prediction market run by the Long Now Foundation for incentivizing forecasts/bets about long-term events of social importance such as technology or the environment. I evaluate use of Long Bets as a charitable giving opportunity by winning bets and directing the earnings to a good charity by making forecasts for all available bet opportunities and ranking them by expected value after adjusting for opportunity cost (defined by expected return of stock market indexing) and temporally discounting. I find that while there are ~41 open bets which I expect have positive expected value if counter-bets were accepted, few or none of my counter-bets were accepted. In general, LB has had almost zero activity for the past decade, and has not incentivized much forecasting. This failure is likely caused by its extreme restriction to even-odds bets, no return on bet funds (resulting in enormous opportunity costs), and lack of maintenance or publicity. All of these issues are highly likely to continue barring extensive changes to Long Bets, and I suggest that Long Bets should be wound down.