Machine learning competitions are susceptible to intentional overfitting. Numerai proposes Numeraire, a new cryptographic token that can be used in a novel auction mechanism to make overfitting economically irrational. The auction mechanism leads to equilibrium bidding behavior that reveals rational data scientists’ confi- dence in their models’ ability to perform well on new data. The auction mechanism also yields natural arguments for the economic value of a Numeraire token.
Numeraire
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