Monday, June 9, 2008
Predictions and the Long Bet
How many times have you been sitting at Darrells sloppily consuming a special, vehemently arguing over topics of vast predictive insignificance? Well, it is time to put down that sandwich and put your money where your mouth is.
Enter: Long Bets
The accountability mechanism founded in 2002 by Stewart Brand and Kevin Kelly, and operated by Long Now Foundation. The intention of Long Bets is to encourage responsibility in prediction-making (by keeping a public roster of predictions), to encourage long-term thinking (by offering an opportunity to shape a long-term bet), and to sharpen the logic of forecasting (by recording the logic of predictions and bets.)
Warren Buffett recently bet an ambitious hedge fund operator $1 million that they won't beat the returns of S&P 500 after their extremely hefty fees are accounted for. Buffett claims investors will do as well with a no-load index fund over the ten years of the bet. He has long been critical of the performance claims of hedge funds, and his bet is intended to put his money where his mouth is.
In order to make a Long Bet, bettors need to lay out their reasoning. It's worth reading the two sides' very short arguments about investing because the two extremes of investment advice are contrasted in them.
Buffett's Big Bet is by far the largest bet on Long Bets. The previous largest Long Bet was one for $20,000 between Mitch Kapor and Ray Kurzweil. The two prominent thinkers are betting on whether an Artifical Intelligence will pass the Turing Test by 2029. Ray is certain an Artificial Intelligence will pass muster by then and Kapor is sure it will not get close. In 21 years, we will see who is right!
You don't need a million dollars to make a Long Bet. The minimum wager is $200, and is open to anyone. No money changes hands until someone takes up your challenge. You can also simply make a public prediction, which does not require anyone to bet against you. Any prediction can become a bet later. To avoid laws against wagering, the money goes to charities and not to the bettors.
The hope of Long Bets is that these public wagers will prompt people to consider the implications of current developments in the near-distant future -- and then to keep their attention on what happens.