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As an example, Varoufakis imagined a game where you might get "brownie points or credit points if you predict next month's inflation rate more accurately than the Fed."
I find it hard to believe that there is real value under that.
The player that predicts it best is unlikely to be a great forecaster. They are likely to be a statistical anomaly that comes from having millions of people make uneducated guesses.
But hey, maybe there is something there and they just didn't explain it enough?
Fun fact: aggregated crowdsourced predictions for sports games have ~55-60% accuracy. That means if you get enough of them and play the odds you get, you'll win more often than not; the challenge is getting enough people to participate. I knew a guy who started a company doing exactly that; we lost touch but they were doing alright last I heard from him.
I dunno if that translates to other areas, but I'd sure be interested to find out. Valve certainly has the audience size to get enough participants, and that audience are from all walks of life so it's a more accurate cross-section of the populace as well.
... now that I put it like that, I'm a little jelly. That sounds like really interesting data.
But sports games don't pay even odds. You can't just bet $10 on the favourite in every game, win 60% of the time, and come out ahead. You might only get paid $1.10 per dollar for a win. I'm not sure I understand how it's helpful. Maybe only apply to games that pay enough?
Wisdom of crowds is a thing, but that isn't how this ex-Valve dude's example was structured. You can't reward someone in particular for getting it right if you are averaging the crowd.
Yeah agreed, every month its going to be a different person who is right. You won't know who until you know the rate of that month. How is that helpful?
I imagine he's thinking of the thing where you get a crowd to guess the weight of a cow and then take the average of their guesses.
Plus, the people most affected by inflation aren't usually the ones attempting to forecast it.
Yeah, wisdom of crowds is a thing. Maybe I misunderstood what they meant. You ask everyone to predict, use the average for whatever Supervillain plan you have, then reward people who guessed better than the fed as an incentive to keep playing?
I would worry the reward and prior knowledge of the fed forecast would interfere with the wisdom of the crowd.