I had never before attended a business conference with a 28 percent chance of an orgy.
But those were the official orgy opportunities when I arrived at Manifest, a self-described “gathering of forecast nerds” that forecast startup Manifold Markets hosted in Berkeley, California, last month.
By the second day of the conference, the rate had risen to 47 percent. And on the third day they achieved 100 percent – because there had actually been an orgy. (No, I wasn’t invited.)
This strange mix of data and debauchery—equal parts Math Olympiad and Burning Man—was the prevailing mood at the manifesto, held in a converted hotel and populated by a crowd of about 250 engineers, bloggers, economists, students, and other weirdos.
They were there to celebrate prediction markets, online platforms that allow users to bet on future events – everything from “Will Ukraine regain control of Crimea before the end of 2024?” to “Will Elon Musk and Mark Zuckerberg in 2023.” Have a physical fight?”
On Manifold Markets, users can create a market on any theme and invite other users to bet on it. Winners receive bragging rights and Mana units, the company’s in-game currency, which they can convert into charitable donations or use for other bets.
Prediction markets are not a new idea, nor is the hope that betting could provide useful information. Betting on elections and other political events was widespread in the United States in the 19th and early 20th centuries. And in countries where political betting is still legal, odds are often cited as a meaningful data point alongside polls and polls.
But in recent years, prediction markets have caught the attention of a group of Silicon Valley empiricists who believe we can fix many of society’s problems by betting on our future, the way we bet on stocks or sports games.
These people believe the world is full of bad information – biased news, unworldly expert opinions, crazy conspiracy theories. A lot of this information is spread by people who have no skin in the game. (Or worse, people with an incentive to lie.) And many people have lost trust in the experts and institutions like the government and the media that once served as trusted arbiters.
They believe that prediction markets offer a better way to search for the truth: they reward those who are good at predicting by allowing them to make money off those who are bad at it, while also engaging with the facts in an unbiased manner .
Over the past year, I’ve heard AI researchers betting on the coming year that we’ll get AGI – artificial general intelligence, a computer that can do anything a human can do – and making side bets on, for example, when a artificial intelligence will win a Nobel Prize or whether an AI-generated film will be nominated for an Oscar.
Prediction markets have also emerged in connection with major world events such as the war in Ukraine. And in areas like venture capital and economic forecasting, trend watchers have begun looking to prediction markets for signs of what’s to come.
This year, when a group of South Korean scientists claimed to have created a room-temperature superconductor called LK-99 – a groundbreaking discovery with enormous implications if true – prediction markets were abuzz with bets on whether the discovery would pan out be credible. (That was not the case.)
I went to Manifest to try to understand the appeal of prediction markets and get into the minds of the people who obsess over them. And while I wasn’t convinced that these markets would be a major part of our future, it’s not a possibility I would bet against.
An old idea revived by rationalists
The basic idea behind Manifold Markets and similar platforms like Kalshi and Polymarket is as follows: Markets aggregate information. The more information they summarize, the more accurate they tend to be. And if enough people make enough bets and have enough information, the markets can tell you something useful about the future.
Most of us accept this principle when it comes to investing. If Apple’s stock price rises 10 percent one day or falls 20 percent the next, we assume it’s because smart investors with access to good information have changed their minds about the company’s prospects, and that it’s not just a random blip.
Research has also shown that betting markets on election results can be more accurate than polls. (Though their recent record has been more mixed.)
But how would markets perform at predicting other things? For example, could you find out whether Taylor Swift’s next tour will sell more tickets than her last, not by asking music experts or concert promoters for their opinion, but by opening a market that allows everyone – fans, other musicians, even hedge funder Ms. Swift herself – to weigh in? And would this market become more accurate over time as new information arrives?
So if everyone bet on everything, would our view of the future be more truthful?
This question arose in the 1990s among economists who wondered whether the Internet—which allowed markets to emerge instantaneously and attract participants from around the world—could bring to life the idea of universal, real-time forecasting markets.
Early online prediction markets such as Intrade and NewsFutures gained some respect by allowing users to bet on elections, sports games, entertainment events and more. But most have either closed or been forced to stop accepting real money bets by anti-gambling laws that ban most types of online gambling.
In recent years, however, the idea has been revived by the Rationalists, a movement of intellectual data obsessives that has become a cultural force in Silicon Valley. Many prominent rationalists are fans of prediction markets and have encouraged other rationalists to use them to test their own views.
“Predictive market prices are the means by which a well-functioning civilization knows what it knows,” said Eliezer Yudkowsky, an AI security researcher and prominent rationalist who attended the manifesto wearing a glittering gold hat.
Fake money, real information
According to rationalists, prediction markets are an essential part of a healthy civic ecosystem and a necessary control from experts and mainstream authorities.
They believe prediction markets work because they harness the wisdom of the crowds and filter out noise and bias by reducing controversial debates to simple yes-or-no questions. Good forecasters win more bets over time, while bad forecasters lose money and influence. And everyone learns by watching price action in real time as more information is added to the market.
Some even believe that prediction markets could keep extremists and conspiracy theories at bay by increasing the stakes of fringe opinions. QAnon believers who insist that Democrats are harvesting the blood of children may be reluctant to bet next month’s rent on it — which would prove to anyone watching that they aren’t that serious.
“We live in this delusional world full of things that people cheer for,” Mr. Yudkowsky said. “And if they had to bet money, boy, would they back out quick?”
In the betting-driven utopia envisioned by rationalists, leaderboards would rank experts based on the accuracy of their predictions, and we would only pay attention to predictions that are proven to be predictive. Companies would follow prediction markets to figure out what products they should make or which competitors they should be worried about. Governments would rely on prediction markets, not polls or lobbyists, to figure out what policies to pursue. And opponents with unpopular (but correct) views could make big money betting against the odds.
Of course, there are huge obstacles to this future. Prediction markets don’t work well when only a few people use them or when all participants have identical information about something. (For example, you wouldn’t learn much from the “Will the sun rise tomorrow?” prediction market.) They don’t work for more subjective or difficult-to-measure questions. (For example, who decides whether an AI has surpassed human intelligence?)
Experts have raised other problems with real-money prediction markets – that they could allow rich people to distort public opinion by betting huge amounts of money on their preferred outcomes, that they can encourage illegal or immoral behavior and that insider trading could ruin them.
But if these problems can be overcome, fans believe, these markets could bring logic and intellectual rigor to a world that desperately needs it – much like short sellers on Wall Street think their ability to bet against a company’s stock is one necessary check represents mismanagement in companies.
The revival of rationalism has boosted startups like Manifold Markets, which was initially funded by a grant program from Astral Codex Ten, a rationalist blog that promotes prediction markets. (It also received $1 million from the FTX Future Fund, the philanthropic arm of the bankrupt crypto exchange whose founder, Sam Bankman-Fried, is a fan of prediction markets.)
Most prediction markets are still tiny compared to stock market standards. (According to the company, Manifold Markets has about 43,000 users.) But proponents say they’re still good enough to be useful.
“It’s roughly true that in every area where we could compare data from a prediction market with alternative prediction mechanisms, the market performed better,” said Justin Wolfers, a professor of public policy and economics at the University of Michigan.
“If you want to predict which horse will win the Kentucky Derby,” he added, “you’re better off following the odds than asking the experts.”
Austin Chen, 28, co-founder of Manifold Markets, told me that while the company’s prediction markets used counterfeit money, they were well calibrated—that is, when the site’s users predict a 70 percent chance of something happening, it actually roughly happens 70 percent of the time.
Mr. Chen is a strong believer in prediction markets. (He even created one before he proposed to his wife.) And he said that even though individual markets might be wrong, he believed that prediction markets as a whole were good sources of wisdom.
What they are not, at least when it comes to real money, is legal. This year, the Commodity Futures Trading Commission rejected a proposal from prediction market startup Kalshi to allow its users to bet on which party would control Congress – saying it would be “contrary to the public interest.” “to allow users to bet on elections”. This agency also fined Polymarket, a cryptocurrency-based prediction platform, $1.4 million for offering unregistered options trading last year.
Most people I met at Manifest dismissed these concerns and believed that most real money prediction markets should be legal. (Some drew the line at markets linked to the deaths of public figures — which they said could lead to assassinations.) And few expressed moral concerns about a world that encourages gambling on everything.
“Prediction markets are much better than gambling in a casino or sports betting,” Mr. Chen said. “The bets serve a greater purpose, which is to help the world get better information.”
Make markets fun
For two days, Manifest’s audience — mostly men in their 20s and 30s who all seemed to know each other from Twitter — crowded into rooms and a sun-drenched courtyard to listen to speakers like Nate Silver, the forecasting website’s founder FiveThirtyEight and Robin Hanson, an economist at George Mason University who is considered by some to be the godfather of prediction markets.
Aella, a rationalist sex researcher and author, led the crowd in a “spicy live poll” that required participants to sort by intimate personal information. (For example, how many psychedelic drugs they had taken or how polyamorous they were.)
Then they celebrated. In the evening there were poker games, wrestling matches, a Magic: The Gathering tournament and a karaoke competition. Mr. Yudkowsky debated the left-wing YouTube streamer Destiny. Richard Hanania, the conservative commentator, signed copies of his book on vigilance. A shirtless man was doing acro yoga near a fire pit.
And of course they created markets – many, many markets, mostly jokes about the conference itself.
“Will Grimes show up at the manifesto?” (Answer: No.)
“Will anyone in the manifesto walk around in a fursuit?” (Answer: Yes.)
“Will Jimmy Carter die during the manifesto?” (Answer: Fortunately, no.)
There are disadvantages to conducting a conference this way, let alone a society. But at Manifest, where the money was counterfeit and the mood was high-spirited, no one was particularly keen to hedge their bets.
“I spend time on Manifold that I used to spend on Twitter,” said Joshua Fleming, 28, a civil engineer from San Diego. “It’s somehow more fun to follow the news.”
Mr Fleming estimates he places dozens of bets each week on topics such as politics and gambling. He enjoys earning mana, which he can then donate to charity. But most of all, he said, he enjoys being proven right.
“There is a competitive aspect,” he said. “I feel good when I win.”