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

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

#201

Post by JasonADrury »

watwut wrote: post #200
JasonADrury wrote: post #198

Earlier quoted context omitted.

I don't think this is true. A lot of crime happens, most criminals don't get caught. > It involves a lot of grey areas and is not something you can just easily automatically flag. Successful, high confidence trades by traders who do not make them frequently are trivial to detect statistically. There exist automated systems which detect this. It's extremely difficult to make highly profitable trades based on insider i…

What you are saying is that it is possible to catch the most blatant and frequent inside traders. Insider information does not have to be "frequent" to be profitable "insider information" situation. Which is specifically unlikely to cover senate people or even most people having access to inside information in this or that special circumstances. > This sentence kind of suggests to me that you might be thinking of som…

You're completely misunderstanding me.

You don't have to be a frequent trader to make a lot of money insider trading, you do have to make very high confidence (i.e. risky) trades though. A single one of those will stand out, not the frequency. Unless you're a habitual options trader or something, such trades will instantly be a huge red flag.

>The OP specified "members of the US Congress" as his group of interest. However, I think that yours "it is atypical to be engaged in insider trading that does not involve high frequency of trades" is just incorrect.

My bad, I missed that. I suspect it's inherently harder to investigate members of congress for anything, but I also suspect that there's far less illegal insider trading happening by members of congress than people often suggest. I'm not sure there's really any very good evidence that congresspeople are beating the market, someone tried to look at the numbers here https://www.maximum-progress.com/p/congressional-insider-tra...

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

#202

Post by lxgr »

tptacek wrote: post #165
lxgr wrote: post #159

Earlier quoted context omitted.

Would you argue the same for the stock market, i.e., that the only rational active market participants are insider traders? If not, why not?

I would say that the popular conception of insider trading as a problem of fairness to other traders on financial markets is misapprehended, but no, it's not at all true that the only rational actors on financial markets are insiders.

> the popular conception of insider trading as a problem of fairness to other traders on financial markets is misapprehended

Well, it's the legal theory underpinning insider trading laws in much (all?) of the EU.

And the US might have a different legal theory underpinning their regulations, but practically, it largely amounts to the same effect, so under POSIWID, it's questionable whether the difference matters much.

> no, it's not at all true that the only rational actors on financial markets are insiders.

Then a non-insider-trading prediction market should be possible and at least somewhat useful too, no? You'd essentially create incentives to do thorough research and analysis of public information and publish the results.

Whether it's practically possible to enforce is a different question.

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

#203

Post by anigbrowl »

tptacek wrote: post #183
anigbrowl wrote: post #181

Earlier quoted context omitted.

I don't think you have a real point here, and are just using pejorative language about gambling to suggest one. Your thesis seems to be that only insiders can make valid predictions, which is nonsense.

I'm saying that most people --- and functionally all the people who feel victimized by insiders --- on Polymarket are gambling, not predicting. I feel pretty comfortable with how sound that argument is. I agree that there are users of prediction markets who are neither "insiders" (for whatever definition of that you want to use) nor gamblers, but they're participating with the understanding that they're bidding along…

This is just redefinition to belabor your insiders point (which I am not disagreeing with). Non-insiders are gambling, but they are also making predictions, with varying degrees of skill

Some kinds of gambling are truly random (unless they are scams) and no prediction is possible. Other kinds involve some degree of skill and predictive power. For example, people can make predictions on races based on past form, even though the element of chance can't be eliminated. It seems like you're trying to redefine 'prediction' to mean 'anticipated outcome as assessed by the most informed' in order to disqualify the validity of any opinions held by non-insiders.

I get that you want everyone to be aware of how prediction arguments were originally a fun way for experts to drive decision making without writing ever-longer arguments for their position. But you seem to be overlooking the the fact that objections are not so much to insiders disrupting hte prediction market as the impropriety of government officials or their special friends cashing in on military adventurism. Said government officials defend engaging military adventures without consent or even notice to Congress by citing security, yet placing big bets on markets to make a quick profit is highly insecure.

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

#204

Post by tptacek »

anigbrowl wrote: post #203
tptacek wrote: post #183

Earlier quoted context omitted.

I'm saying that most people --- and functionally all the people who feel victimized by insiders --- on Polymarket are gambling, not predicting. I feel pretty comfortable with how sound that argument is. I agree that there are users of prediction markets who are neither "insiders" (for whatever definition of that you want to use) nor gamblers, but they're participating with the understanding that they're bidding along…

This is just redefinition to belabor your insiders point (which I am not disagreeing with). Non-insiders are gambling, but they are also making predictions, with varying degrees of skill Some kinds of gambling are truly random (unless they are scams) and no prediction is possible. Other kinds involve some degree of skill and predictive power. For example, people can make predictions on races based on past form, even…

I don't care about insiders cashing on on adventurism. Or, rather, I care about the adventurism, but I do not care even a little bit about the impact of it on gambling platforms like Polymarket. I think I'm on reasonably firm footing when I say that (a) the inventors and popularizers of modern prediction markets and (b) US law doesn't care either.

The irony here is that the one bank-shot argument I'd see in the medium term for "insider trading" enforcement at places like Polymarket is Nevada Gaming Commission-style gambling regulation.

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

#205

Post by Dylan16807 »

sparky_z wrote: post #135
jen20 wrote: post #130

Earlier quoted context omitted.

They aren’t predicting anything if the result is known a priori. Words matter - “prediction markets” just smooths over grift by making it sound reasonable.

The result was not, and could never have been, known a priori. All sorts of random things could have gone wrong with the operation causing the raid to fail and Maduro to remain in power. Trump could have just randomly changed his mind, or postponed the raid to beyond the end of January (the cutoff for the betting market). The person placing the bet was still taking a chance, but it was an informed chance that shifted…

> This "intelligence gathering" function is the primary goal of a prediction market. It's the only reason it makes sense to even have them. If you turn it into some parlor game where everybody who participates has access to all the same information, then what are we even doing here?

If everyone has the same information, then whoever does better analysis wins. That's far from a parlor game.

Ideally people with good info and people with good analysis can both make money. (And ideally nobody takes real-world actions to make their bet come true.)

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

#206

Post by vintermann »

senordevnyc wrote: post #144
vintermann wrote: post #123

Earlier quoted context omitted.

The attitude of powerful politicians to money is more, "if I can get the milk, why should I keep a cow". You don't actually need billions in your bank account, there's not so much you need to spend it on anyway and it's more trouble than it's worth. The real power is in your network. You can move money to where you want it via that - even to yourself in the form of speaking fees, if you should need some change.

You should tell this to the current administration. They all seem to be lining their pockets.

Fair point. It's gotten worse lately. I wonder if it's because of doomerism (not necessarily unjustified): they maybe don't trust their support networks to be around much longer.

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

#207

Post by schoen »

tptacek wrote: post #54
schoen wrote: post #52

Earlier quoted context omitted.

Thanks, I forgot about that one. I've read some of his other writing on this subject and I didn't remember this paper.

It's OK, I didn't have it in cache either, I just remembered "people like Robin Hanson have said insider trading on prediction markets is a feature not a bug" and GPT5 tracked it down for me. :)

It's a bit late to reply now, but Robin Hanson just weighed in on the current thing, or, if you prefer, doubled down:

https://www.overcomingbias.com/p/its-your-job-to-keep-your-s...

Apparently there's also something about the duration of a White House press conference where the press secretary may have been deliberately helping some people?

I continue to think prediction markets are potentially extremely useful and valuable, but I feel like there's a huge conceptual muddle about why people would (1) care about an outcome of a market and (2) be willing to bet on the outcome of a market. And perhaps (3) whom else they would be happy or unhappy to have participating in the market with them. I doubt people will be super-content with prediction markets until those issues are a bit clearer for more participants in any given market. (And I don't know exactly how we can make them so.)

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

#208

Post by tptacek »

schoen wrote: post #207
tptacek wrote: post #54

Earlier quoted context omitted.

It's OK, I didn't have it in cache either, I just remembered "people like Robin Hanson have said insider trading on prediction markets is a feature not a bug" and GPT5 tracked it down for me. :)

It's a bit late to reply now, but Robin Hanson just weighed in on the current thing, or, if you prefer, doubled down: https://www.overcomingbias.com/p/its-your-job-to-keep-your-s... Apparently there's also something about the duration of a White House press conference where the press secretary may have been deliberately helping some people? I continue to think prediction markets are potentially extremely useful and v…

I could go either way on prediction markets but I don't think the dilemma here is all that complicated. I think most people interacting with them are just valorizing gambling, and want a Nevada Gaming Commission to step in and make sure that the games are fair. They're not supposed to be fair! They're supposed to predict! It's in the name!
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