Feb 22, 2022
For now, US-based prediction markets can’t use real money without clearing near-impossible regulatory hurdles. So smaller and more innovative projects will have to stick with some kind of play money or reputation-based system.
Any play money or reputation system has to confront two big design decisions:
Should you reward absolute accuracy, relative accuracy, or some combination of both?
Should your scoring be zero-sum, positive-sum, or negative sum?
As far as I know, nobody suggests rewarding only absolute accuracy; the debate is between relative accuracy vs. some combination of both. Why? If you rewarded only absolute accuracy, it would be trivially easy to make money predicting 99.999% on “will the sun rise tomorrow” style questions.