IN  WHICH Ross Rheingans-Yoo—a sometime economist, artist, trader, expat, poet, EA, and programmer—writes on things of int­erest.

# Reading Feed (last update: July 5)

A collection of things that I was glad I read. Views expressed by linked authors are chosen because I think they’re interesting, not because I think they’re correct, unless indicated otherwise.

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Blog: Tyler Cowen @ Bloomberg View | The NBA’s Reopening Is a Warning Sign for the U.S. Economy — "If so many NBA players are pondering non-participation, how keen do you think those workers — none of whom are millionaire professional athletes — are about returning to the office?"

# Metaculus has some issues

In Zvi's 2/11 Covid update, he turned to Metaculus for help. He looked at the numbers. Becase the man is an inveterate trader, he saw odds that were Wrong On The Internet and just couldn't stop himself from creating an account to bet against it. And then he saw the payout structure and decided he was done after making a single prediction.

I spent some time with the Metaculus site and figured out how they borked this one up enough to drive away Zvi Mowshowitz. I'll try to explain it here.

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Here's a presumably current description of the scoring function that I found on the FAQ, slightly abridged:

Your score $S(T;f)$ at any given time $T$ is the sum of an "absolute" component and a "relative" component: $S(T;f)=a(N)\times L(p;f)+b(N)\times B(p;f),$ where $N$ is the number of predictors on the question.

If we define $f=1$ for a positive resolution of the question and $f=0$ for a negative resolution, then $L(p;f)=\log_2(p/0.5)$ for $f=1$ and $L(p;f)=\log_2((1−p)/0.5)$ for

# PredictIt Arbitrage

note: Long after I posted this, PredictIt changed their policies on margin requirements in "linked markets", a small step towards market efficiency. Nevertheless, they left in place their 5% tax on withdrawals and 10% tax on gross profits, so the central argument that inefficiencies can stop even the most commonsense arbitrages from correcting out-of-line markets, remains largely true.

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Political betting site PredictIt offers everyone the ability to (legally) bet (real money) on the outcome of political events. For example:

You can pay 39¢ for a Yes share in BUSH.RNOM16, which will be worth $1 if Jeb Bush wins the Republican nomination, and$0 if he does not. Similarly, you can pay 63¢ for a No share in BUSH.RNOM16, which will be worth $0 if he wins and$1 otherwise. (Another way to think about this is that you can sell a Yes share for 37¢ or buy one for 39¢. These numbers are different for pretty much the same reason that you can't sell your used textbooks