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A prediction market user made $436k betting on Maduro's downfall

bbc.com

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Re: A prediction market user made $436k betting on Maduro's downfall

#111

Post by undeveloper »

randyrand wrote: post #98
kqr wrote: post #96

Earlier quoted context omitted.

Well, better synthesis of public information is also a way to win. Some people think of that as more fair. Another way to win is to use them for hedging exposure elsewhere. That also doesn't require inside information.

We are all in the same world. Go find the information you need to make informed choices. Betting on the weather? Go build weather stations. Betting on Kim Kardashian? Go interview her. This "go find valuable information" approach is broadly applicable to making money.

pro insider trading is an odd position to defend

Re: A prediction market user made $436k betting on Maduro's downfall

#112

Post by thaumasiotes »

tlb wrote: post #104
bjackman wrote: post #99

Earlier quoted context omitted.

Why should we want prediction markets to be fair? I want them to reveal facts about the world. They only need to be fair inasmuch as it serves that goal. I don't think it wouldn serve that goal to forbid insider trading? (Why do we forbid insider trading in the stock market? Not because it's unfair. Because it makes the market worse at doing what we want it to do, which is funding the most productive enterprises).

Given that inside information makes prediction markets more accurate, why do you believe it doesn't make stock markets more accurate? If, say, Enron insiders could've shorted their own stock, that would have improved accuracy and thereby diverted more funding to more productive enterprises. I guess there could be second-order effects when insiders can actually change the outcome, which is why athletes aren't allowed…

> Given that inside information makes prediction markets more accurate, why do you believe it doesn't make stock markets more accurate?

He didn't say that it doesn't. It obviously does make stock markets more accurate.

But it tends to drive down the total amount of money available to be invested in stocks, which is compatible with the claim that it makes the market worse at funding productive enterprises.

Re: A prediction market user made $436k betting on Maduro's downfall

#113

Post by scoofy »

bjackman wrote: post #99
kqr wrote: post #96

Earlier quoted context omitted.

Well, better synthesis of public information is also a way to win. Some people think of that as more fair. Another way to win is to use them for hedging exposure elsewhere. That also doesn't require inside information.

Why should we want prediction markets to be fair? I want them to reveal facts about the world. They only need to be fair inasmuch as it serves that goal. I don't think it wouldn serve that goal to forbid insider trading? (Why do we forbid insider trading in the stock market? Not because it's unfair. Because it makes the market worse at doing what we want it to do, which is funding the most productive enterprises).

>Why should we want prediction markets to be fair? I want them to reveal facts about the world.

I do not think this is a reasonable position. The problem is that predicting "real facts about the world" creates a situation where you could take out an place a sizable bet on your neighbors house burning down. Allowing prediction markets is, thusly, inherently problematic. Allowing them to be anonymized with insider information, and you've a recipe for disastrous externalities.

Re: A prediction market user made $436k betting on Maduro's downfall

#114

Post by thaumasiotes »

enjeyw wrote: post #40
biophysboy wrote: post #21

How often are these prediction markets "correct"? Has this been studied?

It absolutely has been! In general prediction markets can’t be “correct” or “incorrect” - for instance if a prediction market says there’s a 60% chance of an event occurring, and it doesn’t occur, was the market right or wrong? Well it’s hard to say - certainly the market said the event was more likely to occur than not, but only just, and who knows? Maybe the event _only just_ occurred, and very nearly didn’t! So ge…

> for instance if a prediction market says there’s a 60% chance of an event occurring, and it doesn’t occur, was the market right or wrong? Well it’s hard to say - certainly the market said the event was more likely to occur than not, but only just, and who knows? Maybe the event _only just_ occurred, and very nearly didn’t!

For most events like this, you'd want to see the market spike to 0% or 100% as the deadline approached. And in particular for an event that happens, you want to see the spike to 100% before it happens. Remaining at 60% until after the fact is wrong because the occurrence of the event becomes more certain as it gets closer.

Being "well-calibrated" as you describe is a very bad quality metric in the sense that two sets of predictions can achieve the same calibration profile while differing markedly in quality. The farther the predictions are from 50%, the better they are, but your calibration metric doesn't take this into account.

Re: A prediction market user made $436k betting on Maduro's downfall

#116

Post by randyrand »

undeveloper wrote: post #111
randyrand wrote: post #98

Earlier quoted context omitted.

We are all in the same world. Go find the information you need to make informed choices. Betting on the weather? Go build weather stations. Betting on Kim Kardashian? Go interview her. This "go find valuable information" approach is broadly applicable to making money.

pro insider trading is an odd position to defend

No need to limit yourself to "trading". You can use this approach to buy real estate, build products, companies.

This private info is often even considered "trade secret", which is protected against being stolen and spread.

Re: A prediction market user made $436k betting on Maduro's downfall

#117

Post by vintermann »

scoofy wrote: post #113
bjackman wrote: post #99

Earlier quoted context omitted.

Why should we want prediction markets to be fair? I want them to reveal facts about the world. They only need to be fair inasmuch as it serves that goal. I don't think it wouldn serve that goal to forbid insider trading? (Why do we forbid insider trading in the stock market? Not because it's unfair. Because it makes the market worse at doing what we want it to do, which is funding the most productive enterprises).

>Why should we want prediction markets to be fair? I want them to reveal facts about the world. I do not think this is a reasonable position. The problem is that predicting "real facts about the world" creates a situation where you could take out an place a sizable bet on your neighbors house burning down. Allowing prediction markets is, thusly, inherently problematic. Allowing them to be anonymized with insider info…

And to spell it out, you can then go burn your neighbours house down and profit from it. Predictions markets don't just predict, they can cause "unlikely" things to happen because they give a way of profiting from making "unlikely" things happen. This is a problem with plain old stock market insider trading too, and with sports betting when the participants take out bets on themselves.

Re: A prediction market user made $436k betting on Maduro's downfall

#118

Post by Boltgolt »

hobofan wrote: post #91
jjmarr wrote: post #78

Earlier quoted context omitted.

Charlie Kirk has a 3% chance of winning a Nobel Peace Prize right now according to Polymarket. He's climbed from 1% since Maduro was arrested. It seems unlikely since Nobels aren't awarded posthumously.

Normally they aren't, but maybe the US will take over Sweden and the Nobel Foundation and make it happen.

...only to find out they invaded the wrong country! (Nobel peace prizes are awarded in Oslo)

Re: A prediction market user made $436k betting on Maduro's downfall

#119

Post by throw-12-16 »

thaumasiotes wrote: post #115
p1dda wrote: post #97

From the BBC article: "Insider trading is illegal in the stock market" Not for members of the US Congress.

It seems to have been outlawed ~13 years ago.

And that certainly seems to have solved the problem...

Re: A prediction market user made $436k betting on Maduro's downfall

#120

Post by vintermann »

jjmarr wrote: post #78
enjeyw wrote: post #40

Earlier quoted context omitted.

It absolutely has been! In general prediction markets can’t be “correct” or “incorrect” - for instance if a prediction market says there’s a 60% chance of an event occurring, and it doesn’t occur, was the market right or wrong? Well it’s hard to say - certainly the market said the event was more likely to occur than not, but only just, and who knows? Maybe the event _only just_ occurred, and very nearly didn’t! So ge…

Charlie Kirk has a 3% chance of winning a Nobel Peace Prize right now according to Polymarket. He's climbed from 1% since Maduro was arrested. It seems unlikely since Nobels aren't awarded posthumously.

Well, Nobel peace prizes aren't usually awarded to people calling for invasions of their home country either, or cheering for the extrajudicial double-tap killing of smugglers/random fishermen.

Who's to say a dead person can't have done the most to "promote peace conferences" as mentioned in Nobel's will? These days, I'd say dead people make a larger net contribution to peace than most politicians.

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