no point in being right when you're dead: death-related biases in prediction markets

[gusl]

If experts are rational, then they will assign equal utility to all the worlds in which they are dead. When betting about questions that are related to their death, these experts should therefore be biased towards optimism.

For example, betting that the human race will *not* be extinct by 2020 seems wiser than betting that it will, regardless of the actual odds and the agent's probability estimate. If a doomsayer is right, then his prize money will be no use to him (in fact, he will never be able to collect it).

While this scenario seems extreme and unrealistic, gambles about issues relevant to the probability of death of the agents (e.g. the Avian flu) should be similarly biased towards optimism.

Does anyone want to steal this idea? I'm surely not being original, am I?

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Another possible bias is that experts with a strong time preference (i.e. agents who want money *now*, whether because they are currently making investments with big expected returns, or because they are expecting to die soon, or because are plainly short-sighted), will be reluctant to make long bets.

It seems possible that such people would have knowledge that the rest of us could use, but never will because they will not give their input in the form of bets.

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Here's George Carlin's 2 cents on death-related biases.

Comments

Long Bets

[r6.livejournal.com]

I suspect long term bets are still useful, because the bet can be sold and resold to younger and younger people. The hard part finding something to bet with whose value is stable.

Re: Long Bets

[gustavolacerda.livejournal.com]

sold and resold to younger and younger people

...or, more generally, "to people with longer expected lifespans".

But when we talk about nuclear fallouts and epidemics, I think the risk of death is fairly even across the whole population. I guess you can always try to sell to someone who is in an area of the globe that is safe from the bet's particular danger.

[trufflesniffer.livejournal.com]

Pascal's Wager's an interesting 'bet' on death itself, which is of course biased towards optimism and 'rational'. (Though suspect because there are a great deal of internally consistent and optimistic metaphysical propositions one could assume, which are 'rational' but mutually inconsistent.)

Perhaps if the 'betting unit' is considered the group rather than the individual, then the lengths over which the bets affect the 'life' of the agent is longer (i.e. I will die in about half a century, but my family of direct and indirect descendents will live much longer), and so the duration which must be exceeded in order for the optimistic default to become rational is longer.

Does that make any sense?