Inspired by a tweet from our social media team, Replication Markets PI Charles Twardy gives a lesson on what it means to “defend your position.”
The trade of the next forecaster replaces the trade you just made. If you still have points, return to defend your position. Many smaller nudges have more power than a few big ones.
Suppose you’re convinced power posing won’t replicate.
You can make a bid to change the probability from 40% to 5%, if you spend all 300 points. You’re pushing uphill towards the extreme.
But your opponent only spends 66 to reverse it. They’re pushing downhill.
And you’re out of the game.
Try moving the probability from 40% to 20% for 100 points. If your opponent reverses your action, you can defend your position two more times … and it will cost your opponent 125 total points if they respond all three times.
You can move the probability from 40% to 30% for 41 points, and return to defend your trade up to six more times. It would cost your opponent 155 points to reverse your actions.
Meanwhile, both you and your opponent have other claims to trade, so this slower dance lets you better negotiate the “consensus,” and take advantage of opportunities where the costs are in your favor.
If the market later moves in your favor, you can “cash in”. Suppose you moved 40% to 30% once, costing 41 points (and buying 64 “No” shares). If the market is later at 5%, you can “cash in” those shares and free up points to play on other claims!
- Sell a few of your “no” shares (say, raise 5% to 7%) to gain points to use elsewhere.
- If other claims are more wrong, that increases your expected gain, and expected chance at prizes.