Higher-order forecasting could be a useful concept for prediction markets and forecasting systems more broadly.

The core idea is straightforward:
Nth-order forecasts are forecasts about (N-1)th order forecasts.

Abstract representation of 2nd-order forecasts. Dall-E 3

Examples

Here are some examples:

0-Order Forecasting (i.e., the ground truth)

1st-Order Forecasting (i.e., regular forecasting)

2nd-Order Forecasting

How much will the forecasts for US GDP in 2024 and 2025 be correlated over the next year?
How many forecasts will the question "What will be the GDP of the US in 2024?" receive in total?
If the question “What is the chance that a Republican will win the 2028 Presidential Election?” was posted [...]

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Outline:

(00:28) Examples

(02:32) Benefits

(04:46) Challenges

(05:29) Conclusion

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First published:
May 22nd, 2024

Source:
https://www.lesswrong.com/posts/8BAZmmqhD98YBrfsC/higher-order-forecasts

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“Higher-Order Forecasts” by ozziegooen

LessWrong (30+ Karma)