The Berkman Klein Center for Internet & Society

Who Decides What's True? | BKC's Jonathan Zittrain in Conversation with Polymarket's Shayne Coplan

Duration: 4:58 875 transcript words EN summary

Video summary

The conversation between Jonathan Zittrain and Shayne Coplan explores the inherent complexities of defining truth within prediction markets, using the humorous yet illustrative example of whether Ukrainian President Zelensky wore a suit before July. This specific bet highlights a fundamental challenge in decentralized systems: when an event occurs but its definition is ambiguous, such as the fashionability of all-black attire versus a traditional suit, determining the winner becomes difficult. The dialogue reveals that while markets aim to resolve outcomes based on the "spirit of the market," reality often presents gray areas where consensus among credible reporters or observers is required to settle disputes, turning subjective interpretations into objective market results. A central theme of the discussion is the operational mechanism behind these prediction markets and how they handle ambiguity without relying solely on a single authority. Unlike traditional betting where one party pays out directly, these platforms operate as two-sided markets where liquidity providers take a small fee regardless of the outcome, though specific bets may not always involve this rake. When a dispute arises regarding whether an event actually happened or how it should be categorized, the system does not immediately force a resolution but instead allows for a period where participants can post bonds to challenge the current determination. This process introduces a layer of complexity where the market itself effectively becomes a bet on the validity of the initial outcome, shifting focus from the predicted event to the accuracy of the resolution mechanism. The speakers also address the evolving role of third-party entities in managing these disputes, noting that while some might assume a specific individual like Holly Burton handles these decisions, the process is managed by external parties with ongoing improvements to ensure fairness and clarity. The goal remains for markets to settle according to their intended logic, even when faced with messy real-world scenarios where definitions are contested. Ultimately, the dialogue underscores that in a decentralized environment, truth is not just a matter of fact but a collective agreement reached through consensus, market dynamics, and the continuous refinement of rules to accommodate the unpredictable nature of human interpretation.

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From the sublime to the ridiculous, does Zelensky wear a suit before July? This is probably a good example. >> I'm being dragged to the ring. These are all the hardest ones. I didn't even know I was coming to Harvard. We aim to please. >> No, I love it. Yes. And uh this one, I imagine you'd say probably pretty thinly traded markets. Um obviously if Zelensky needs a little bit of boost for the Ukrainian treasury, he could play the market. But the reason I brought this up was because will he wear a suit? And I don't mean to get all like philosophy department, but what is a suit? Cuz if you look and see, here's like the menswear guy on X. And he arrived wearing this outfit, a black jacket with matching black pants and a black shirt. So I don't know, like I not that Harvard is the locus of fashion here, but how many people say that's a suit? How many people say that is not a suit? All right, so it looks like the no's have a bit. How do you resolve a bet like what? I I don't resolve it. I know a lot of people think I do. I get a lot of very angry messages. >> Just mad you resolve it? No, look, so when you're in the market page, underneath there's a rule set. And it's like a systemic challenge with creating prediction markets, that sometimes the rules are ambiguous. Sometimes it's difficult. Now, what people sometimes don't realize is like it is a two-sided market. Yes wins or no wins. It's not us paying someone out, it's not us taking money out of pocket. >> You win either way because you take a small rake off of the bets, right? >> At times. Not on this one. Um but Is that right? You just decide which bets to take a rake from? Uh yeah. How do you decide? It's a good question. Still figuring that out. Work in progress. Huh. Um but in in this one, yeah, it's not a suit. That's not a suit. Okay. So, some people may think it's a suit, but it's obviously not a suit more than it is a suit, you know? So, um you know, it's the lesser of two evils. The The issue is that the issue is that the way that the resolution mechanism works is it's it's like a it's like a decentralized oracle's crowd. >> of credible reporting. Yeah. That's a great name for a network. Consensus of credible reporting. If I If I write that, can you guys publish it? Can we do some Harvard research? >> Let's Let's Let's make a deal. So, but that I was really excited to bring you this. >> [laughter] >> But consensus of credible reporting, that does mean like media? Yeah, I mean, look. The The goal is always for markets to resolve according to the spirit of the market. So, consensus of credible reporting, one tweet says this, one whatever. Um But who decides? Somebody's got to decide. You I mean, you're going to decide to release the money to somebody. So, that's the whole thing is that basically people can post a bond. I'm going to get really nerdy right now and I'm going to lose a lot of people, but people can decide to post a bond to go and propose whether a market should be resolved or not. And basically, if people dispute that the resolution is accurate, it goes to a dispute resolution process. And that's where gets messy. Um And is that run by Holly Burton? No, it's run by a third party. But there's improvements coming soon. Uh Soon to be fourth party. Not quite. Not quite. But close enough. Um And basically what happens is there's uh like a two-day period of the dispute where people are kind of Basically, people are voting on whether uh or like people are putting money on the line on on whether or not Wait, they're betting on the outcome of the bet? >> The market becomes a bet on the outcome of the bet, but that's what it always was. That's what the market is. Let's just take that one more time. Yeah. There's a new bet on whether Vladimir Zelensky was wearing a suit. >> Mhm. Which is different from the bet on whether he would wear a suit. It's the same thing. But The moment that you see the photo, yeah, what is the market on will he wear a suit versus was he wearing a suit? And we use that to inform who won? >> No, no, no. It's just It's just if it's about an event occurring, you know, the moment the event happens but there's ambiguity, obviously the market becomes about whether or not that was the event or not immediately. >> Or whether or not this third party, soon-to-be a third-and-a-half party, is going to say that it happened. Yeah, I mean, look, when you are trading a market that's that's a prediction market that is based on resolution, up until you get paid out, the market is on what it resolved to.