21–30 of 193 posts
This article lacks even the most basic understanding of probability and statistics. Slot machines "93 cents on the dollar" return is a statistical certainty of 7% loss. You are playing a repeated game which by the law of large numbers will converge to the 93% probability. In prediction markets if the markets are fully efficiently priced, in the absence of transaction costs you WILL get 100% back in the long run. Slot…
I'm getting some really skeezy ads for prediction markets on TikTok at the moment, the message is effectively "hey, are you broke? earn $50+/day on Kalshi!"
I have to say I was this huge fan of the idea and I didn’t anticipate it would happen like this.
This article lacks even the most basic understanding of probability and statistics. Slot machines "93 cents on the dollar" return is a statistical certainty of 7% loss. You are playing a repeated game which by the law of large numbers will converge to the 93% probability. In prediction markets if the markets are fully efficiently priced, in the absence of transaction costs you WILL get 100% back in the long run. Slot…
> In prediction markets if the markets are fully efficiently priced, in the absence of transaction costs you WILL get 100% back in the long run. This is basically equivalent to the observation that, in a perfectly efficient market, no entity can ever make a profit. And yet, in the real world, entities make profits all the time. In fact, they make wild, unimaginable, world-changing, history-altering profits. This is a…
In a perfectly efficient market all entries can make the same profit on a given investment at the same level of risk and time horizon. There’s nothing inefficient about a market having a risk premium etc.
How do prediction markets account for interest rates? I feel like I should be willing to pay no more than ~96 cents for a contract that will definitely resolve to a dollar in a year. Who puts up the other 4 cents?
Edit to add that on non eligible markets your theory is correct, for example: https://polymarket.com/event/will-jesus-christ-return-before...
This article lacks even the most basic understanding of probability and statistics. Slot machines "93 cents on the dollar" return is a statistical certainty of 7% loss. You are playing a repeated game which by the law of large numbers will converge to the 93% probability. In prediction markets if the markets are fully efficiently priced, in the absence of transaction costs you WILL get 100% back in the long run. Slot…
If the odds in some financial products are worse than gambling while everyone can access gambling, then people should stop making a distinction under the guise of protecting investors
it just drives investors to actual gambling because they cant get the exposure they were already looking for
I wonder how much of the activity on prediction markets these days is competing LLM scripts? I would guess the overlap in prediction market punters and AI boomers is high.
It'd be a good way to lose money at the moment. Probably not too far off in the future it would make sense though
I'm a little confused by the "Yes" versus "No" asymmetry. For example, one of the top trending ~~bets~~ markets right now is on whether Miami or Indiana will win the NCAA football championship tonight. You can either take "Yes" on Indiana at 74c, or "No" at 27c, or you can take "Yes" on Miami at 27c or "No" at 74c. Or, there's another potential outcome - you can also bet on a tie at 10c yes/91c no. Is this research s…
To me this is all the more reason to get regulatory gatekeeping out of the financial markets If the odds in some financial products are worse than gambling while everyone can access gambling, then people should stop making a distinction under the guise of protecting investors it just drives investors to actual gambling because they cant get the exposure they were already looking for
This argument gets trotted out by Wall Street every decade or so, usually under the guise of "democratising" some piece of finance. It's almost always bunk.
Most investment capital is looking for safe returns. It's not competing with gambling. Even within the high-risk end of finance, the game is in turning that high risk into above-market but predictable returns through portfolio mechanics. (Fuckups aside, you can't generally portfolio mechanic your way out of the negative expectated value of a lottery ticket.)
More simply: the notion that we need to increase risk and profitiabilty for intermediaries in investments to keep people from gamblig is a false economy. Gamblers are seeking a different thrill from what financial markets are designed to provide. To the degree we have a problem, it's in letting our markets look more like casinos.
> exposure they were already looking for
Broadly speaking, if you want exposure to the economy you're investing. If you want exposure to a number that goes up, you're gambling. This is an overly-simplistic delineation. But it works for first-order estimates.
I wonder how much of the activity on prediction markets these days is competing LLM scripts? I would guess the overlap in prediction market punters and AI boomers is high.
It'd be a good way to lose money at the moment. Probably not too far off in the future it would make sense though