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Allow Margin-Betting on Long-Term Questions
In a comment on one of the questions, Markov wrote:
"I now only rarely wager on long term questions. I can make 10 good short term wagers with the same $ it takes to make 1 good long term wager and earn 10 times as much. IMHO the only time to do long term wagers is when you have too much $ to wager efficiently elsewhere (not my problem yet, unfortunately) or when you are highly confident you can get in and out real quick before the market stagnates."
In order to level the playing field, I suggest that bets on long-term questions be automatically placed on margin, with longer-term questions being more highly margined. Here's an illustration of the % of the bettor's cash that he would put up for questions of the following suspension dates:
Over 4 weeks: 70%
Over 6 weeks: 60%
Over 9 weeks: 50%
Over 12 weeks: 40%
Over 24 weeks: 30%
Over 36 weeks: 20%
Over 1 year: 15%
Over 2 years: 10%
Over 3 years: 5%
Margin calls would be applied automatically as questions moved, over time, into a higher-margin category, with the required amount being deducted from the player's cash reserve or, if that was insufficient, from deductions from his other bets, starting with the least margined.
There would be somewhere, perhaps atop the Predictions list, a running total of Margin Due Down-the-Road, perhaps shown as a bar-chart, to indicate the dates and amounts due at each point down the road.
The bettor would be alerted one week before any margin call with a "pinned-to-the-top" notice of his Predictions and Dashboard screen--and maybe others too. He could, by clicking on that notice, have the margin call satisfied immediately. That would allow him to specify if he'd like the margined bet itself to be reduced to satisfy the call, or which set of bets he'd like to reduce to supply margin-cash, in case he didn't want them all reduced by an equal percentage. He'd do this either by highlighting them, or by manually cashing in some percentage of each bet in advance of clicking the "collect margin" button.
(This percentage-bet-reduction would be a desirable feature on its own, instead of forcing the bettor to cash in a bet in its entirety and then reenter the bet at a smaller amount, which is a bit annoying and inconvenient.)
If participants can't meet a margin call, their margined bet would be cashed out at that point--or reduced to a size their resources can support.
In rare cases it might happen that a bettor would go into the red. (For instance, if a large, highly margined long term bet or bets happened to be settled against the bettor long before its suspension date.) But, since this is a game, I guess the bettor could be allowed to continue to play even with a negative balance. Alternatively, long-term bets could be divided into two categories: those subject to being suddenly settled if some event occurs, and those that must run until their termination date. The amount bet on items in the former category could be limited, in order to prevent bettors from suddenly going into the red.
Or some other formula could be employed to analyze the riskiness of a bettor's bets in relation to his reserves, to prevent him from allowing his entire account from getting too highly margined, all things considered. This is a complex subject that I'll leave to people who are getting paid to strain their brains about such matters.
Since only play money is involved, there should be no great wariness about the prospect of a few bettors getting overextended. The much greater risk is the unattractiveness of the whole Hubdub enterprise if long-term bets can't be margined, since they merely tie up capital and make the game no fun.
I suggest that users be given the option to opt out of the margin system entirely, as it will be sure to confuse or unsettle many participants initially. However, if they opt to join, I suggest that it work automatically (according to a list of time-spans and percentages similar to the one I provided above), for the sake of simplicity and consistency.
"I now only rarely wager on long term questions. I can make 10 good short term wagers with the same $ it takes to make 1 good long term wager and earn 10 times as much. IMHO the only time to do long term wagers is when you have too much $ to wager efficiently elsewhere (not my problem yet, unfortunately) or when you are highly confident you can get in and out real quick before the market stagnates."
In order to level the playing field, I suggest that bets on long-term questions be automatically placed on margin, with longer-term questions being more highly margined. Here's an illustration of the % of the bettor's cash that he would put up for questions of the following suspension dates:
Over 4 weeks: 70%
Over 6 weeks: 60%
Over 9 weeks: 50%
Over 12 weeks: 40%
Over 24 weeks: 30%
Over 36 weeks: 20%
Over 1 year: 15%
Over 2 years: 10%
Over 3 years: 5%
Margin calls would be applied automatically as questions moved, over time, into a higher-margin category, with the required amount being deducted from the player's cash reserve or, if that was insufficient, from deductions from his other bets, starting with the least margined.
There would be somewhere, perhaps atop the Predictions list, a running total of Margin Due Down-the-Road, perhaps shown as a bar-chart, to indicate the dates and amounts due at each point down the road.
The bettor would be alerted one week before any margin call with a "pinned-to-the-top" notice of his Predictions and Dashboard screen--and maybe others too. He could, by clicking on that notice, have the margin call satisfied immediately. That would allow him to specify if he'd like the margined bet itself to be reduced to satisfy the call, or which set of bets he'd like to reduce to supply margin-cash, in case he didn't want them all reduced by an equal percentage. He'd do this either by highlighting them, or by manually cashing in some percentage of each bet in advance of clicking the "collect margin" button.
(This percentage-bet-reduction would be a desirable feature on its own, instead of forcing the bettor to cash in a bet in its entirety and then reenter the bet at a smaller amount, which is a bit annoying and inconvenient.)
If participants can't meet a margin call, their margined bet would be cashed out at that point--or reduced to a size their resources can support.
In rare cases it might happen that a bettor would go into the red. (For instance, if a large, highly margined long term bet or bets happened to be settled against the bettor long before its suspension date.) But, since this is a game, I guess the bettor could be allowed to continue to play even with a negative balance. Alternatively, long-term bets could be divided into two categories: those subject to being suddenly settled if some event occurs, and those that must run until their termination date. The amount bet on items in the former category could be limited, in order to prevent bettors from suddenly going into the red.
Or some other formula could be employed to analyze the riskiness of a bettor's bets in relation to his reserves, to prevent him from allowing his entire account from getting too highly margined, all things considered. This is a complex subject that I'll leave to people who are getting paid to strain their brains about such matters.
Since only play money is involved, there should be no great wariness about the prospect of a few bettors getting overextended. The much greater risk is the unattractiveness of the whole Hubdub enterprise if long-term bets can't be margined, since they merely tie up capital and make the game no fun.
I suggest that users be given the option to opt out of the margin system entirely, as it will be sure to confuse or unsettle many participants initially. However, if they opt to join, I suggest that it work automatically (according to a list of time-spans and percentages similar to the one I provided above), for the sake of simplicity and consistency.
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Inappropriate?I think this is an excellent suggestion. Thanks for submitting it with such a detailed explanation.
I often see interesting and newsworthy markets that I'm hesitant to wager heavily on, as the settlement is so far away.
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Inappropriate?Thanks. Here are a couple of afterthoughts: First, margin calls could also be set up (by default, which could be overridden by the user) to take their cash from user-profits on the bet needing additional margin. That would be the most "painless" (low-impact) way of handling the situation.
Second, the attractiveness of allowing margin on long-term bets isn't just that it ties up less capital, but that it has the effect of exaggerating price moves. For instance, a 10% price move on a bet at 50% margin would yield a user-profit of 20%. Because the odds on long-term bets typically fluctuate in such a boringly sedate fashion, this would greatly increase their attractiveness. -
Inappropriate?Thanks for this detailed suggestion. We certainly do want to incentivize long term predictions better than we do currently. If we were to employ a solution such as this we would have to work out the details and ensure that it did not over-complicate things for new/novice users. We will look again at this when tackling the long term wagering issue.
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this is one of the best points
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Inappropriate?I agree the devil is in the details. The way to avoid complicating things for beginners is to start them off with the current system, with no margin choices available. As I wrote:
"I suggest that users be given the option to opt out of the margin system entirely, as it will be sure to confuse or unsettle many participants initially."
Later, they could opt in--but if they did, the margin levels would be chosen for them automatically, and margin-call fulfillment would also be handled automatically (by default, unless over-ridden). This would keep complexity to a minimum.
But there'd have to be several pages of documentation, including three or four fully explained examples, to satisfy the curiosity of users. This would be able to handle most puzzlement, if well done.
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