“Vijana na Ramli”
In the advent of mass unemployment and coupled with disinterested political class, who are more concern in keeping scores between themselves than working to improve the social welfare of the society, youth who feel left alone- will seek various activities to fill such a vacuum.
I would not have expected that in the event of lack of employment coupled with price rot (inflation) one would have resorted to a strange activity of betting about events they have no marginal information competence as a way to entertain themselves or fill the void left with lack valuable employment. The assumption is that provision of prediction markets for uncertain events gives those who bets an incentive to be correct. The market will have been a good mechanism to filter out signal and noise and remove those with no skin in this game. Only if the predictors are on average somehow informed.
Am not sure what to call it, but betting is probably one activity where someone is happy to loose R100, but also get outrages to pay the same amount for a cup of tea. Of course, the house does not really care about the immorality of exploiting the worse in human nature. In fact, it will hire your favorite celebrity to advertise the odds. Will be interesting to know whether the celebrities themselves are betting! Media houses are in competition to nudge you to undertake bets, which defy reality. Even predictions, which are covered with all signs of irrationality, have never deter participants placing bets.
Walking around in any capital city in Africa today, one will find a plethora of betting points call it “Kibanda Umiza” or whatever they call it in your locale. The sole role of these shops have been to occupy these “wall people” –the name given to young people of age 17–23 years old in Algeria who are unemployed. The reason why they are named such is “because all they do is lean against the wall and watch street go by”. Bruce Berkowitz view gambling as “in an extreme form gambling is a sickness” It is hard to refute his claim since some people actually prefer gambling and loosing than not gambling at all.
Besides- being unemployed, in the nation which have failed to create jobs and run the risk of social unrest from the mass unemployment devised a mechanism to keep the unemployed occupied, betting on European leagues(all sort of them, not merely football) –oddly end of the world sport contest — not based on any game theory or statistical competence strategies but by pure close your eyes and choose. The need for understanding the difference between risk and uncertainty is not the required knowledge on the side of the players- it is the received knowledge on the side of the game designer. On the choice of what to bet on, the frequency of play does not improve the odds of the player, however in aggregate it improve his/her cumulative loss, whether they know it or not.
Despite the type of the game, these folks play- it is designed in a manner that, they keep playing which is both good for the house and the lazy political class who have absconded from seeking better option for the youth. The ability of players to differentiate risk which is measurable and priciable to uncertainty, which is unmeasurable, and one cannot attach a price it is not something privy to unemployed youth in the continent. However, if one design a game, which provide a potential signal of potential eventual winning chance- people will not care how big those odds are stacked against them. In absence of better option such option are better than none. The net winner in this arrangement is the house and the state. Betting is the best way to tax the unemployed- the joke goes as those who bet pay tax twice, for being ignorant of the game; they are playing and the common consumption tax. The actors do not immediately understand even the comprehension of risk dimension regarding the danger of impulsive betting behavior. Even though the risk dimension tends to reduce the need to worry about them, than having one risk, it does make wonder whether how long does one play the game before figuring out the Ponzi nature of it?
Fundi Mudi excitement on the prospect of him winning big one day tell the tale. He work on piece jobs in construction sites and share his erratic income flow with the house, betting on football matches in far geographies which he have little knowledge of the team or the league. At best, he try to figure out whether the team won the last few matches- not knowing past performance is not a good proxy for the future performance. Even the best statisticians often come behind in their predictions with all their Monte Carlo simulations and their massive chest of knowledge on the subject. “Kibanda umiza” is a market place designed for “Mudi” and the likes to engage in trying to solve a multi complex multi-dimensional problem of possible outcomes by thumb sucking.
Yes “Kibanda umiza” is there to facilitate weath transfer from those who gamble to the house. After all, the betting house leverage the basic instinct of human nature; greed, laziness and the desire to get rich quickly. Human want less complex, minimum effort to gain maximum reward. This explain the like of “fundi Mudi” take risks and bet and also why betting have existed throughout history.
My friend @lswendo likes to think that prediction markets are mechanism through which market communicate true information. However, he does not tell me whether such true information is that in aggregate “ramli” players will lose! Neither, does he tell me that the player understand the price design- in fact, that price is not a single dial which aggregate all the inputs or even whether the players are aware of such? Whether he think players, playing willingly a game of crossing a high-speed railway line blindfolded is such a fantastic idea. Of course, price has many dimensions whether one knows or not.
For every transaction, especially those where information asymmetry rain supreme, the guy on the other side of the table often is well informed about the game, have more money than you have more power than you and more experience than you who is betting. The ultimate sucker at the table is you. One would have wish the players to at least have some guarding rails in these contests. Truth is that the ultimate looser when all is said and done is a society replete with gamblers who are used to take reckless bets and cant reason any more, probably this is not a desirable outcome we all want, but it is the one we are cultivating.
“I think the record shows the advantage of a peculiar mindset-not seeking action for its own sake, but instead combining extreme patience with extreme decisiveness”- Charlie Munger
