I would like to test how different odds influence betting behavior. After the market closes, I will call @FairlyRandom to generate a number from 1 to 100. If the number is between 1 and 52, this market resolves to YES; otherwise, it resolves to NO.
I will also record betting behavior for this and related markets with varying odds and analyze the data statistically to look for patterns in participants’ decisions.
1,000
1.00@MaxE Well, one of those assumptions is already incorrect, the 51% and 52% markets were made two days apart.
I hypothesise that the systematic bias for these will be in the direction of 50% (e.g. towards NO here because 52%>50%) because irrational bettors will likely prefer a lower prob of winning bigger (exciting gamble) over a bigger prob of winning smaller (boring hedge), even though they both have the same expected value
@TheAllMemeingEye Yeah I think you will start to see that effect if you move the odds to like 99% or something, not so much when it's so close to 50% still.
@Velaris It's partly exploratory, but one thing I want to measure is how people react to slightly uneven odds. By running many markets with controlled probabilities and tracking betting patterns, I can estimate how much participants overbet or underbet relative to the true odds. One goal is to quantify systematic biases.
@4fa You won't see the same systematic biases in cases where the true odds are so obviously known though -- it has been done many times before and people will not bet away from the true price by more than a tiny amount unless they are trolling (which will be quickly corrected). See the daily coin flip markets for example.
@A Several people already bet away from the true price in the 51% market by more than a tiny amount. Not sure I would call that trolling rather than simply calling it bad bets.
@4fa Sure, I guess a few people can always mess with the market for whatever inscrutable reasons, but the actual market price is always going to quickly go back to very close to the true price (when it's so obvious).