downgrade your priors

I’ll never forget that fourth Knicks game. I was sitting in a bar with a group of quantitative finance traders, and the mood was suboptimal. With less than ten minutes on the clock, the Spurs were 29 points ahead.A few of us were jokingly monitoring the situation on Polymarket. The prediction market gave the Knicks a 99.6 percent chance of losing. One of my friends decided he would have higher expected value in going home, so he left the watch party.Then, miraculously, the tide shifted. The Knicks came back, possessed with electric ferocity, to win the game by a single point. At the buzzer, the entire bar was roaring at the top of its lungs, jumping in ecstasy, drunkenly high-fiving complete strangers. I can’t describe the primordial passion I felt in that moment. It was a barbaric, religious fervor I’ve only experienced a few times in my life.Walking home through the revelry, my thoughts drifted back to the prediction market. What was the point? The main reason people watch sports is…