https://astralcodexten.substack.com/p/mantic-monday-31422

Changes in Ukraine prediction markets since my last post February 28:

1. Will Kiev fall to Russian forces by April 2022?: 69% —→ 14%
2. Will at least three of six big cities fall by June 1?: 71% —→ 70%
3. Will World War III happen before 2050?: 20% —→21%
4. Will Russia invade any other country in 2022?: 12% —→10%
5. Will Putin still be president of Russia next February?: 71% —→ 80%
6. Will 50,000 civilians die in any single Ukrainian city?: 8% —→ 12%
7. Will Zelinskyy no longer be President of Ukraine on 4/22?: 63% —→20%

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Numbers 1 and 7 are impressive changes! (it’s interesting how similarly they’ve evolved, even though they’re superficially about different things and the questions were on different prediction markets). Early in the war, prediction markets didn’t like Ukraine’s odds; now they’re much more sanguine.

Let’s look at the exact course:

This is almost monotonically decreasing. Every day it’s lower than the day before.

How suspicious should we be of this? If there were a stock that decreased every day for twenty days, we’d be surprised that investors were constantly overestimating it. At some point on day 10, someone should think “looks like this keeps declining, maybe I should short it”, and that would halt its decline. In efficient markets, there should never be predictable patterns! So what’s going on here?

Maybe it’s a technical issue with Metaculus? Suppose that at the beginning of the war, people thought there was an 80% chance of occupation. Lots of people predicted 80%. Then events immediately showed the real probability was more like 10%. Each day a couple more people showed up and predicted 10%, which gradually moved the average of all predictions (old and new) down. You can see a description of their updating function here - it seems slightly savvier than the toy version I just described, but not savvy enough to avoid the problem entirely.

But Polymarket has the same problem: