A big reason why traders are reluctant to post limit orders is that they are afraid of news traders sniping them at the last moment. One solution is the concept of the retroactive close times: After a market resolves, the market creator can select the time at which market-deciding event actually occurred and all trades after that are N/A'd and treated as if they didn't occur.
Will Manifold add this as feature at any point in 2024? The feature must be live across many markets on the site to count.
See also: /ian/will-we-add-periodicfilling-limit-o
1,000
1.00market subsidizers generally subsidize because they want to learn the probability of something before it happens. Not to pay for a google alert that the event has already happened. I feel like past post bets are a waste of the liquidity subsidy except in rare cases where the news is premature
Alternatively we have volatility halts like the stock exchanges. We could gradually reinvent the market structure of successful stock exchanges from first principles or we could just copy it whole. If a market moves 10% suddenly, trading is halted for a bit and the creator is notified to give the creator time to resolve it if it needs to be resolved.
Stock exchanges don’t have N/A. They can bust some trades but only obvious errors. Fortunately you can rephrase all conditional markets as conjunction yes/no markets that never N/A, and get rid of N/A option on new markets. Volatility halts plus periodic limit orders mitigate the problem enough without introducing N/A
I really love this idea. Success on Manifold should be based on prediction, not being in the right place at the right time with a big balance.
Biggest downside from my point of view, though, is that some events don't have an obvious time at which they are known, especially if they are something where the first news might be unreliable. So presumably it becomes creator discretion. But this will inevitably upset some people. (Something like the death of Putin could arguably end up in his category.)
But then I suppose a good rule of thumb for the creator (and maybe more than a rule of thumb if you could think of a good way to codify it) would be "have there been any significant bets placed in the opposite direction since the news/rumour came out?". If so, maybe it was a rumour and the early news traders deserve their profits. If not, maybe actually everybody knows it was reliable news and it's fine to roll back.
Definitely some upsides to this! A downside is spoiling the beautiful feature of prediction markets where you can count on being able to watch the prediction market instead of the news. Like you hear about some crazy thing a politician did and you can just check the market and see if it actually matters or not.
Is there a way to get the best of both worlds? Like limit orders are retroactively canceled but not market orders? (Um, I don't think that makes sense, but, yeah.)
PS, @JonathanRay's proposal of volatility halts sounds sensible. But I think it needs to be combined with a broader revamp where markets never close indefinitely like in the status quo. Trading can just be temporarily paused for various reasons.