People don’t often put their money where their mouth is, but they do put their reputation where their mouth is all the time. If I say ‘The Strategy of Conflict is pretty good’ I am betting some reputation on you liking it if you look at it. If you do like it, you will think better of me, and if you don’t, you will think worse. Even if I just say ‘it’s raining’, I’m staking my reputation on this. If it isn’t raining, you will think there is something wrong with me. If it is raining, you will decrease your estimate of how many things are wrong with me the teensiest bit.
If we have reputation bets all the time, why would it be so great to have more money bets?
Because reputation bets are on a limited class of propositions. They are all of the form ’doing X will make me look good’. This is pretty close to betting that an observer will endorse X. Such bets are most useful for statements that are naturally about what the observer will endorse. For instance (a) ’you would enjoy this blog’ is pretty close to (b) ‘you will endorse the claim that you would enjoy this blog’. It isn’t quite the same – for instance, if the listener refuses to look at the blog, but judges by its title that it is a silly blog, then (a) might be true while (b) is false. But still, if I want to bet on (a), betting on (b) is a decent proxy.
Reputation bets are also fairly useful for statements where the observer will mostly endorse true statements, such as ‘there is ice cream in the freezer’. Reputation bets are much less useful (for judging truth) where the observer is as likely to be biased and ignorant as the person making the statement. For instance, ‘removing height restrictions on buildings would increase average quality of life in our city’. People still do make reputation bets in these cases, but they are betting on their judgment of the other person’s views.
If the set of things where people mostly endorse true answers is roughly the set where it is pretty clear what the true answer is, then reputation bets do not buy much in the quest for truth. This seems not quite right though. One thing reputation bets do buy is prompting investment in finding out the answer, if it is somewhat expensive but worth finding out if it is a certain way. For instance, if it looks like all the restaurants are closed today so you want to turn around and go home, and I say ‘no, I promise the sushi place will be open’, then I am placing a reputation bet. It wouldn’t have been worth checking before, but my betting increases your credence that it is open, making it worth checking, which in turn provides the incentive for me to bet correctly.
Another place reputation bets are helpful is if a thing will be discovered clearly in the relatively near future, and it is useful to know beforehand. For instance, we can have a whole discussion of what we will do when we get back to my apartment that implies certain facts about my apartment. You can believe these ahead of time, and plan, because you will think worse of me if when we get there it turns out I made the whole thing up.