Theo
Article
Theo is a recurring person in the Astral Codex Ten archive, appearing 2 times across 2 issues between November 05, 2024 and November 07, 2024. The archive places it in contexts such as “He’s French, goes by “Theo”, is a former banker”; “Theo made his giant bet on Polymarket”; “WSJ has revealed Theo to be an ordinary degenerate gambler”. It most often appears alongside Betfair, CFTC, Kalshi.
Metadata
- Category: People
- Mention count: 2
- Issue count: 2
- First seen: November 05, 2024
- Last seen: November 07, 2024
Appears In
Related Pages
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- Betfair (2 shared issues)
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- CFTC (2 shared issues)
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- Kalshi (2 shared issues)
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- Kamala (2 shared issues)
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- Manifold (2 shared issues)
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- Metaculus (2 shared issues)
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- Nate Silver (2 shared issues)
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- Polymarket (2 shared issues)
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- PredictIt (2 shared issues)
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- Trump (2 shared issues)
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- Wall Street Journal (2 shared issues)
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- 538 (1 shared issues)
External Links
Source Context
Recovered passages from the original issue text. When the raw archive preserved outbound links inside the source passage, they are listed directly under the quote.
The mathematicians say there are simple voting systems that could practically ensure the selection of a universally-popular moderate. We reject these, and - in a country with a hundred living Nobel laureates - near-invariably pick a pair of mediocrities, extremists, or lunatics. Once their inherent badness has been magnified by a froth of propaganda, millions end out convinced that one candidate or the other wants to hunt them for sport, put them in camps, or institute a communist/fascist/theocratic dictatorship. Some people threaten to flee the country if the wrong person wins; others prepare to commit suicide. Loving grandmothers disown their family members for being too tepid in their loathing. Psychologists warn of an upcoming wave of mass trauma.
Inline links: hunt them for sport, flee the country, commit suicide, disown their family members, Psychologists, warn
On October 14th, Polymarket gave Donald Trump 54% odds of winning, compared to Nate Silver’s 49% and Metaculus’ 45%. Whatever, everyone knows Polymarket has a small right-wing bias, and 5% isn’t too bad. Three days later, it had risen from 54% to 61%, despite no news and no change for Metaculus or Nate, bringing the Polymarket/Silver spread to an unprecedented 11%. What happened? This is the rare prediction market story where the answers are already in the New York Times and the Wall Street Journal: one really rich guy put $30 million on Trump (a recent followup by Jorge Velez claims it’s actually more like $75 million). Although he prefers to remain anonymous, reporters have talked to him and are able to reveal that he’s French, goes by “Theo”, is a former banker, and has no insider connections. He just a normal rich guy who really thinks Trump will win. This is exactly the sort of shock that prediction markets are supposed to be resilient against. Instead, the market stayed at 61% for days, swung even higher for a while, finally fell back down two weeks later, then went back up again. What happened? The simplest story would be insufficient liquidity: there just weren’t enough people to gather the $75 million it would take to bet against Theo. This is superficially plausible: Polymarket requires crypto and bans Americans, so the mispricing couldn’t be corrected until enough crypto-literate, American-election-following foreigners showed up to bet $75 million. That’s a tall order, and maybe it took two weeks. But the simple story seems wrong. Other real-money markets rose approximately in tandem with Polymarket. For example, Smarkets got to Trump 59% on 10/16, and peaked at 64% on 10/30. Kalshi followed a similar path. Both tracked Polymarket, not Nate Silver or Metaculus (neither of whom ever went above Trump 55% since Harris joined the race). So I think the remaining stories are: Theo made his giant bet on Polymarket. By coincidence, at the same time, bettors everywhere massively overcounted a few good polls for Trump and started a feeding frenzy on pro-Trump shares. This made all other markets gain, and Polymarket stay at its Theo-caused peak, until a few bad polls for Trump brought everyone back to reality last week.
Inline links: New York Times, Wall Street Journal, followup, Smarkets, https://substackcdn.com/image/fetch/$s_!8twW!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F25ccd651-3404-446a-a7cb-5747af316038_1180x315.png
Theo made his giant bet on Polymarket. By coincidence, at the same time, bettors everywhere massively overcounted a few good polls for Trump and started a feeding frenzy on pro-Trump shares. This made all other markets gain, and Polymarket stay at its Theo-caused peak, until a few bad polls for Trump brought everyone back to reality last week.
Suppose you have a coin. You think there's a 90% chance it's fair and a 10% chance it’s biased 60/40 heads. Then you flip the coin and comes up heads. What should your new probability be? You would solve this with Bayes’ Theorem; the answer is 88% chance it’s fair, 12% chance it’s biased.
Then, starting mid-October, a semi-anonymous French banker who went by “Theo” started plowing millions of dollars into Trump on Polymarket, inflating his chances (different reporters would estimate Theo’s total bet at between $30 - $75 million dollars). At the height of his activities, Polymarket was +13% redder than Metaculus, an unprecedented difference. All the other real-money markets rose close to Polymarket’s level because of arbitrage, and all the non-money forecasters stayed close to Metaculus.
If not for Theo, there’s no reason to think Polymarket would ever have shifted from its usual regime. So when we’re asking whether to trust Polymarket’s conclusion (Trump 60%) or Metaculus’ conclusion (Trump 50%), we’re asking whether to trust the normal operations of the prediction market vs. the personal opinion of one whale. I trust the normal operations of the market.