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Are you sure? I don't know how market creation works since I've never created one, but do you really just pay an upfront cost that Predyx eats? Isn't it something like earnest money to make sure you have enough to pay out to market participants, that you get back if people guess wrong? If the latter, my suspicion is that it works out the same, and the issue is with a way that Predyx reports things to make it feel otherwise.
I could be totally wrong of course.
Guess I should just investigate. F*** me, another rabbit hole I don't really have time for.
You get sats back after the market resolves. You just need to post more sats to cover potential loss if you want to set the probabilities.
That's what I'm saying. I suspect it'll even out either way.
It will unless the outcome you inflate to 80% instead of 50% doesn't hit.
But if you inflate it to 80% by buying shares after market creation, and it doesn't hit, I suspect you'll end up the same?
The difference is option value. If I pay I pay to create the market with reasonable initial odds, I have to wait until the market resolves to get anything back.
If I buy shares to make the odds reasonable, I can sell them before the market resolves.
If you were risk neutral and had unlimited liquidity (which on the margins, with the amounts people are playing with, it seems reasonable), then it should be equivalent. (i.e. instead of selling those shares, you can buy the opposite position)
instead of selling those shares, you can buy the opposite position
Isn't the discounted present value of getting sats back sooner greater than having to wait until resolution?
That's not about risk neutrality. It's about time preference.
Except I can sell those shares for some return as the possibility is looking less likely.
Instead of selling those YES shares you can also buy some NO shares and end up the same. (I think).
Sure in the end it might all work out the same but I would rather post less sats and have more to bet with than post more and hope to get them back at resolution if my probabilities weren't wrong or I don't hedge it properly.
It's simple maths, simple! ;)
the math is actually hard that's why we're debating this, haha
also, i think @Undisciplined can appreciate, this is why sometimes we have to write down the models, and sit down and do the math... it often isn't that obvious just from talking/thinking
Just kidding, sorry. I know it's difficult to get numbers unless you practically sit on them. Maybe you just need to create one or two markets. Probably create about a match for which you have time of an hour or two to be available and see how it all happens.
💯
They cost less because your loss on all outcomes even outs. But if you make one outcome higher, it means you are putting your sats on it. So why not put the sats where you can use them at any time. Even if you're losing, you'll end up with saving some of them.
I think it’s about the difference in upfront costs rather than an issue with the algorithm.
Starting with even odds costs less at creation. When we then buy shares to make the odds realistic, we end up spending the same but we have shares that can be sold.