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Prediction Markets: Tales from the Election

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Re: Prediction Markets: Tales from the Election

#111

Post by dragandj »

Tenoke wrote: post #99
didibus wrote: post #68

He did need 1 million dollar simply to make a one time 50k return, and it also seemed like it took considerable effort to do it. I don't know how many people with that money also have the know how, are aware of these betting markets, and care much that they'd make an extra one time 50k. I think it'll be interesting to see how crypto based betting markets evolve and if regulations will strike them or not. I don't real…

He locked 1m dollars to take a loan to use, he didn't use 1 million dollars. You can use your assets directly and do earn a 10%+ profit on whatever you put in this case (which I did).

I don’t know why everyone here is talking about dollars, while there is zero dollars involved all the time. The author did not put in any dollars, but his ETH, which he has plenty, since he created the Ethereum thingy. That may be a large part of the answer why no one “exploited” that hole: most people would have to put real dollars in, expose themselves to all kinds of crypto gymnastics, and end up with ETH, which may or may not be convertible to real dollars where they live. And, yes, they would also have the always pleasant exposure to tax authority now (which may or may not be solvable, depending on the place of Earth one happens to live at).

Re: Prediction Markets: Tales from the Election

#112

Post by myownpetard »

f430 wrote: post #98
xalava wrote: post #37

"Prediction markets" is a fancy word for gambling. It is a highly regulated activity almost everywhere, mainly has it can have terrible consequences at the individual levels and major side-effects such as corrupt games in sports. Let's not even talk about politics where it is generally forbidden for obvious reasons. The conclusion is disheartening "It shows a lot about how market efficiency actually works in practice…

It's worse that people actually believe it is a reliable way to predict the future especially now with the pseudo-intellect speak that people in the crypto space resort to. If wisdom of the crowd worked then casinos would be out of business. There's an entire industry on the other side.

What is the relationship between casinos and wisdom of the crowd? Just about all casino games I am familiar with have known and controlled odds. There is no need for a 'wisdom of the crowd' to compute the probability distribution.

Re: Prediction Markets: Tales from the Election

#113

Post by ketamine__ »

crazygringo wrote: post #104
xalava wrote: post #37

"Prediction markets" is a fancy word for gambling. It is a highly regulated activity almost everywhere, mainly has it can have terrible consequences at the individual levels and major side-effects such as corrupt games in sports. Let's not even talk about politics where it is generally forbidden for obvious reasons. The conclusion is disheartening "It shows a lot about how market efficiency actually works in practice…

> "Prediction markets" is a fancy word for gambling. Hard disagree. Gambling is set up with the principal aims of a) making money off the spread and b) getting participants as "gamified" as possible with exciting events and the ability to bet lots of money. Prediction markets are set up with the principal aim of crowdsourcing intelligence from a diverse set of minds. They can be set up by academia, think tanks, resea…

Do you think politics can qualify as a sport? It seems to be a sport to some.

Re: Prediction Markets: Tales from the Election

#114

Post by rspeele »

f430 wrote: post #98
xalava wrote: post #37

"Prediction markets" is a fancy word for gambling. It is a highly regulated activity almost everywhere, mainly has it can have terrible consequences at the individual levels and major side-effects such as corrupt games in sports. Let's not even talk about politics where it is generally forbidden for obvious reasons. The conclusion is disheartening "It shows a lot about how market efficiency actually works in practice…

It's worse that people actually believe it is a reliable way to predict the future especially now with the pseudo-intellect speak that people in the crypto space resort to. If wisdom of the crowd worked then casinos would be out of business. There's an entire industry on the other side.

> If wisdom of the crowd worked then casinos would be out of business.

That does not follow. In prediction markets or sports betting, the gamblers aren't betting against the casino. They're betting against each other, and the casino (PredictIt, BetFair, etc) is skimming off the top, just like Duke & Duke in Trading Places. Most forms of gambling where players do bet directly against the house are games of pure chance where no amount of wisdom will help you beat the odds -- odds which are naturally always stacked in the house's favor.

Not to say that I think these betting markets are good at predicting future outcomes. They're clearly very bad at it! But I do think in concept they could be at least as good as any other method, since the existence of a betting market essentially sets a bounty for beating that market.

What is limiting them is a mix of: obscurity, bet size limits, bet participant count limits, counterparty risk of shady betting sites, cost of fees/taxes making many bets not worth taking. Some prediction markets eliminate parts of that equation but amplify others, like the crypto markets not having the bet size limitations but also being much more obscure and shady.

Furthermore, I don't even think those are problems that should be solved, because if none of those problems existed you'd see big traders like investment companies playing in prediction markets with billions of dollars, and then you'd have way bigger problems with insider trading and the market affecting the outcome. Things as mundane as surprise resignations and as shocking as assassinations.

People already joke about stuff like that happening on PredictIt, with its $850 investment cap. No way to prove that it did, but it would be very easy for certain employees to do and get away with it. For example, in the 2020 election there was a market for when the GSA would ascertain the winner (releasing funds to the transition team). That was a decision made by one government employee. The market started on Nov 18th and had brackets like "Nov 23 or earlier", "Nov 24-Nov 30", "Dec 1-Dec 7", and so on. By the afternoon of Nov 23, with no news, the "Nov 23 or earlier" bracket was trading at 1c. Then the ascertainment happened and it settled.

Now, that could have been a coincidence. It probably was a coincidence. But if you were the GSA administrator you could've made around $70k taking those 1c shares on the 23rd, and nobody would have to know.

Re: Prediction Markets: Tales from the Election

#115

Post by ketamine__ »

lunatuna wrote: post #47
Supermancho wrote: post #15

What I read was a story of making money from some niche prediction market sites (that I would never touch). There is also quite a bit of handwaving, eg "I saw more and more arguments from Very Smart People whom I respected arguing that the markets were in fact being irrational and I should participate and bet against them if I can. Eventually, I was convinced." and showing some math from trivial arbitrary scenarios t…

I think the fascinating part of this article is in the third paragraph: ". . . I would make all of these remaining bets, against willing counterparties, after Trump had already lost the election." I wasn't expecting that. But we are in GME and WSB phase of markets. I guess I have a lot of catching up to do.

Many people felt Polymarket resolved the market too early after the election was called. They then setup another market where the question was whether Trump would be inaugurated. It was possible to make 20% on that market at one point.

I wouldn't compare it to GME and WSB though. It's still stupid.

Re: Prediction Markets: Tales from the Election

#116

Post by Sniffnoy »

I mean speaking personally, the reason I don't get in on such things is that I'd have to hold cryptocurrency. This means both technical complexity (Buterin discusses the fairly low complexity of getting into such markets once you know how to effectively use Ethereum, but not that of getting up to speed on using Ethereum in the first place) and a security problem: Either I keep it in an exchange and have to worry about how trustworthy that exchange is, or I keep it myself and have to worry about losing it all should my private key accidentally become exposed.

So, that's the specific reason I haven't gotten in on it. Get past that barrier and yeah I would've been buying NTRUMP for sure.

Re: Prediction Markets: Tales from the Election

#117

Post by as300 »

pwinnski wrote: post #90
as300 wrote: post #46

I see quite a bit of disappointing talk that disregards the contents of the article, here. Namely, the author names one sort of bias that led 'Very Smart People' to give an outsized likelihood of Trump winning: >I remember thinking at the time that this particular opinion of his was over-confident, perhaps even a result of over-internalizing the heuristic that if a viewpoint seems clever and contrarian then it is lik…

Note that PredictIt offered similar options for all-cash users, and they were also still at 15% for Trump winning after he had clearly long lost. This was not solely, or even primarily, a crypto thing.

This was addressed in the article, though. PredictIt odds could've been skewed by:

* Maximum of $1000 being able to be invested on the platform

* A small fee being taken by PredictIt out of every bet.

Re: Prediction Markets: Tales from the Election

#118

Post by Tenoke »

Sniffnoy wrote: post #116

I mean speaking personally, the reason I don't get in on such things is that I'd have to hold cryptocurrency. This means both technical complexity (Buterin discusses the fairly low complexity of getting into such markets once you know how to effectively use Ethereum, but not that of getting up to speed on using Ethereum in the first place) and a security problem: Either I keep it in an exchange and have to worry abou…

It took me just under 5 minutes to go from debit card to Poly.market in the summer the first time I bet on it, though I later did it with my bank account via Coinbase for slightly lower fees.

Re: Prediction Markets: Tales from the Election

#119

Post by btilly »

opo wrote: post #65
btilly wrote: post #38

Earlier quoted context omitted.

Concrete example, Walmart took out life insurance on its employees because they were betting that their horrible working conditions made people more likely to die than the insurance companies thought. And then were incentivized to make those conditions worse. See https://www.bankrate.com/insurance/life-insurance/dead-peasa... for an overview of current regulations that resulted from that.

>...Walmart took out life insurance on its employees because they were betting that their horrible working conditions made people more likely to die than the insurance companies thought. No, Walmart was doing it since they thought the policies would be tax deductible. They ended up losing money and eventually ended up bringing up a case against their insurance companies: >...Discount retailing giant WalMart cannot su…

My understanding was based on articles like https://workdayminnesota.org/court-slams-walmarts-use-of-dea.... Where Walmart was being sued specifically because there were perverse incentives and what they did was against various state laws.

As to your case, Walmart thought that it could deduct the premiums. It turns out that it could not. Walmart also thought that it could create and collect them under Georgia law. It turns out that it could not. Walmart also has been forced to pay families of workers some of the payouts. None of which it expected.

All of these things affect how profitable the policy is for Walmart. But they don't change the fact that once the policies are taken out, Walmart has a financial incentive to treat workers poorly. Which is why many states had banned the practice. And is why federal law currently only allows companies to take out life insurance on approximately their most highly paid third of employees. (Who also have to consent to it.)

Back to the suit. Walmart sued its insurers in 2002 for fraud for failing to explain these risks. The brief quoted in Snopes is as filed by the insurers in 2005. They lost that judgement, but the case continued on. As of 2009, per http://www.contingentfeeblog.com/2009/05/articles/corporate-..., the Delaware Supreme Court ruled for Walmart a 3rd time. I don't know the final outcome of the case. But it certainly wasn't as open and shut as the insurer's brief made it sound.

Re: Prediction Markets: Tales from the Election

#120

Post by j4yav »

jtxxwl2 wrote: post #106
mvc wrote: post #91

Earlier quoted context omitted.

May I be so bold as to suggest that not all vote rigging conspiracies are considered impossible. Just the ones that have been rejected by every court that has tested them.

One theory I've heard is that the magical soil in the US would compel the riggers to confess and/or provide evidence of their guilt to the courts and to the general public, rather than lying and/or concealing that evidence. In the rest of the world, courts often are not provided with relevant evidence or confessions, and therefore rigging remains possible.

Doesn't this path lead to believing anything you like, once you free yourself from the chains of needing evidence? I feel like I'd lose all track of what is real if I used this logic.
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