Comments on: 2014 Predictions: Calibration Results

By: Greg Q

Greg Q — Wed, 21 Jan 2015 00:51:34 +0000

” 9. Iraq’s government will survive the year without large civil war/revolt: 60%”

Sorry, as with others above I’m pretty sure ISIS counts as the disproof of this one

By: Nornagest

Nornagest — Thu, 08 Jan 2015 01:24:20 +0000

You’re putting too much stock in the idea of a tangible asset. Now, you mentioned gold, so let’s take that as an example. Sure, you can do some interesting stuff with it — it’s a good conductor, it doesn’t corrode under normal circumstances, and it has some handy properties for metalworking. And it has a certain amount of intrinsic value in that way. But most of its value comes not from its physical properties but from the fact that people, due to a series of historical and physical coincidences, have implicitly agreed to use it as a store of value.

This actually undermines the goldbug argument — it means that gold is perfectly capable of crashing or becoming a vector for all sorts of other economic misbehavior, including a lot of government-driven misbehavior, as anyone who’s studied its history already knows. But it makes it a pretty good analogy to cryptocurrency, which has some interesting mathematical properties but which gets its actual value mostly by consensus.

What keeps Bitcoin’s value from being undermined by whatever altcoins someone decides to spin up? Roughly the thing that keeps gold’s value from dropping if someone decides to mint coins out of indium. It’s fundamentally just a Schelling point, with a dash of first-mover advantage.

(That being said, I didn’t buy a lot of Bitcoin.)

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By: Doug Summers-Stay

Doug Summers-Stay — Thu, 08 Jan 2015 01:05:02 +0000

“bitcoin has neither the backing of the legal system nor any underlying tangible asset. All it has is artificial scarcity, a scarcity that is undermined by the ability of people to invent cryptocurrencies of their own.”
That was exactly my thought when I first learned about bitcoin (well before the bubble), and why I didn’t buy any of it. Could someone explain to me why many intelligent people believe otherwise? Even if you are bullish on the idea of crypotocurrencies, why should bitcoin succeed rather than some hypothetical bitcoin 2.0?

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By: Hagios

Hagios — Wed, 07 Jan 2015 19:16:24 +0000

Good summary as well as those below. Thanks. I’ve promoted Taleb’s books a few places in my queue as a result.

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By: Henry Milner

Henry Milner — Tue, 06 Jan 2015 19:02:04 +0000

That doesn’t address SanguineEmpiricist’s complaint (though I don’t understand that in any case), but it _is_ a good way to measure overall accuracy. The number [(-1/n) sum_i log_2 p_i], where p_i is the probability you assigned to the actual outcome of the ith question, is called the KL divergence of the empirical outcome distribution versus your predictive distribution. It has two nice properties: (1) it properly incentivizes you to report your actual uncertainty, unlike some intuitive accuracy measures that reward reporting more certainty than you have; and (2) the “true value” (viewing the questions you answered as a random sample from a larger class of questions) can be estimated from a smaller number of data points, so you don’t have to do what you’ve done, binning the questions into a small number of predictive probabilities and estimating a separate accuracy for each one. The mysterious information-theoretic interpretation for binary outcomes is “I’d need on average this many bits to describe the true outcome if you told me your predictive distribution,” so 0 is the best and 1 is what you get for the baseline strategy of saying everything has a 50% chance.

The calibration curve isn’t a bad thing to do, either, though.

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By: Anonymous

Anonymous — Tue, 06 Jan 2015 14:10:11 +0000

Chill, bro.

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By: Andrew Button

Andrew Button — Tue, 06 Jan 2015 13:35:40 +0000

You thought bitcoin would end the year at over $1000?

Why?

Do you actually believe in bitcoin as a form of currency or did you just think the bubble would last the year?

To me it seems almost beyond obvious that bitcoin is essentially structurally unsound, and that the marketing effort around it was somewhat a pyramid scheme. I was saying this right from the moment I first became aware of the bitcoin rise.

The reason that bitcoin is unsound is that it isn’t backed by any organization capable of exercising force. You know that goldbug argument that currency isn’t sound unless backed by gold or something tangible? Well, that’s not really a valid argument. It’s sufficient for a currency to be backed by a government with strong police forces who can credibly enforce the claim of “legal tender for all debts.” But bitcoin has neither the backing of the legal system nor any underlying tangible asset. All it has is artificial scarcity, a scarcity that is undermined by the ability of people to invent cryptocurrencies of their own.

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By: Adam Casey

Adam Casey — Tue, 06 Jan 2015 00:18:34 +0000

To be fair, Gwen has the same discretion about what he bets on at predictionbook. But of course, I was being tongue in cheek.

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By: jaimeastorga2000

jaimeastorga2000 — Mon, 05 Jan 2015 09:27:27 +0000

He regrets writing “Untitled”.

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By: Nornagest

Nornagest — Mon, 05 Jan 2015 09:16:01 +0000

Sure, but that’s because we have a strong prior re: nuclear war: the previous 23,351 days have contained no nuclear war, which if we don’t have any particular model in mind suggests a commensurately small probability for nuclear war tomorrow.

If we’re in a situation where we don’t have any comparable information, our priors are whatever we choose them to be, and 50/50 is not an unreasonable choice. Though the question of what to do when you don’t even know what reference class to put something in is kind of an interesting one, and it’s one that Bayesian inference doesn’t by itself give you an answer to. Unless you want to forego reference classes entirely and start talking about inference over world-states, but the likes of you and I don’t have the juice for that.

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