::  Posts  ::  RSS  ::  ◂◂RSS  ::  Contact

Long Bets by Confidence Level

December 8th, 2019
bets  [html]
If you want to make a long-term bet one of your options is to register your bet with the Long Now Foundation as a Long Bet. They have some rules, which are roughly:
  • Both parties put up the same amount, at least $200/each.
  • Long Bets effectively runs a donor-advised fund (DAF).
  • When the bet concludes the winner chooses a charity to receive the money.
  • The charity gets the initial stakes, plus half the investment income.
While people have all sorts of reasons why they might want to use Long Bets, one question is: how confident do you need to be for placing a long bet to result in more money going to your preferred charity than just putting the money in a DAF now?

Let's say I claim we'll have talking horses ten years from now, and you're skeptical. You consider betting $1000 against my $1000 via Long Bets. If you win you'll get your $1000 back, my $1000, and half the investment income which (figuring the stock market returns a nominal 7%) will be ~$967, for a total of ~$2967. On the other hand, if you had just put your $1000 in a DAF you'd have ~$1967. Is this a good deal?

Provided putting the money in a DAF for at least that long would otherwise be your best option, if you're 100% confident that (a) you'll win and (b) Long Bets will still be around, then it's a solid deal. You're up about 50%. On the other hand, the less confident you are the worse the deal looks:


(sheet you can copy and play with)

For example, at 60% confidence you're neutral at 6 years, and negative after that. At 75% you're down to neutral at 16 years. At 90%, 32 years. At 99%, 75 years. For an organization trying to promote long-term thinking, it's surprising they would choose a fee structure that penalizes long-term bets so heavily.

Comment via: facebook, lesswrong, hacker news

Recent posts on blogs I like:

Incoming Gantz-Led Government to Invest in Israel’s Infrastructure

Israel’s incoming prime minister Benny Gantz unveiled an emergency government, to take power following an upcoming confidence vote in the Knesset. The last two MKs required to give Gantz a 61-59 majority, two members of Gantz’s own Blue and White Party wh…

via Pedestrian Observations April 1, 2020

Finding home in the time of coronavirus

Disclaimer: I’m going to say this once. Obviously, I am not happy about the coronavirus’s threat to public health or the economic toll it’s taking. I do not think the existence of this pandemic is good. Just so happens that social distancing and remote wo…

via Holly Elmore March 31, 2020

Massachusetts should shut down immediately

We’ve been running 30x fewer tests than other states, and have been extremely tardy in responding to the Biogen outbreak.

via benkuhn.net March 15, 2020

more     (via openring)

More Posts:


  ::  Posts  ::  RSS  ::  ◂◂RSS  ::  Contact