Looking at Both Sides
NewsFutures has (always had) an interesting feature in its user
interface that I want to highlight. I want to explain the difference
so I can rely on it in my explanation of other market formats.
Whenever they create a new (binary) claim, they write a description of
each outcome phrased in positive terms. When they offer a claim on
the San Jose Sharks playing the Los Angeles Kings (tonight at 7:30),
the two positions are “Kings over Sharks” and “Sharks over
Kings”. Whenever you are looking at the market screen that allows
you to buy claims, you only see one side of the market (”Sharks over
Kings”, for concreteness). If you don’t have a position in the
claim, you can only buy the claim. If you have positive assets (from
this viewpoint), then you are also offered the option of selling some.
But there’s always a button that lets you look at the claim from the
opposite point of view. Once you click the button, you see things
from the viewpoint of “Kings over Sharks”. If you don’t have any
assets, or all your assets are in “Kings over Sharks”, You can
still only buy.
When you switch viewpoints, the prices in the order book invert. if
the prices were X$65 offered and X$93 asked when looking at “Sharks
over Kings”, then it will be X$7 offered, X$35 asked when looking at
“Kings over Sharks”. I really like this way of presenting the
prices, but it shouldn’t apply only to binary outcomes. It’s useful
to be able to think of the prices inverting in this way when you talk
about multi-outcome claims as well.
The most common way to present a single binary outcome is to phrase the question in a positive sense, and have a single scale for quoting odds. This means that people betting against the proposition have to subtract from 100 to figure out how much they’re spending or earning.
NewsFutures’ interface simplifies this interaction for the user. There’s a secondary benefit, in that it’s particularly helpful to the seller, and people are more reluctant to bet against outcomes than in favor of them.