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OpenAI fires an employee for prediction market insider trading

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Re: OpenAI fires an employee for prediction market insider trading

#61

Post by ajkjk »

parineum wrote: post #43
gtowey wrote: post #36

Earlier quoted context omitted.

I have come to the opinion that every successful tech company is basically just an arbitrage scheme to avoid regulations and extract value based on that advantage. Airbnb for unlicensed hotels. Uber for unlicensed taxis. Amazon for whitewashing fraudulent products. Bitcoin for unlicensed securities and laundering money. The pattern is upsetting.

That's what happens when the majority of people don't actually support the regulations. If people thought it was wrong to be an unlicensed airbnb or uber, they wouldn't use them. In reality, those regulations are mostly protection rackets and most people don't care about violating them.

that can't be right. If 90% of people are anti-airbnb and the other 10% are pro-airbnb then the 10% just open all the airbnbs.

Re: OpenAI fires an employee for prediction market insider trading

#62

Post by ajkjk »

aleph_minus_one wrote: post #49
lokar wrote: post #45

Earlier quoted context omitted.

People were (and mostly still are) very opposed to Airbnb rentals in their neighborhood.

... but the customers of these Airbnb rentals are not. :-)

that's the point of the regulations...

Re: OpenAI fires an employee for prediction market insider trading

#63

Post by ajkjk »

jacquesm wrote: post #59
jquery wrote: post #52

Earlier quoted context omitted.

This is certainly the most uncharitable way to think about it. I see a prisoner’s dilemma where people often support regulations even if on an individual basis they would personally violate them, because they prefer living in a the less chaotic society. For example anti-dumping regulations… the expected value for any given individual is +EV, but when everyone is dumping, it’s a big -EV

The perfect example is speed limits: everybody thinks they're good and yet they all seem to classify all other drivers into two categories: slowpokes and maniacs. Nobody seems to be able to agree on what a responsible set of rules is around the speed of vehicles.

This is entirely made up? Most people are totally fine with speed limits being what they are and don't say anything about it.

Re: OpenAI fires an employee for prediction market insider trading

#64

Post by staplers »

gtowey wrote: post #36
Hamuko wrote: post #30

Earlier quoted context omitted.

Yeah, Polymarket is explicitly advertising this. > Research shows prediction markets are often more accurate than experts, polls, and pundits. Traders aggregate news, polls, and expert opinions, making informed trades. Their economic incentives ensure market prices adjust to reflect true odds as more knowledgeable participants join. > If you’re an expert on a certain topic, Polymarket is your opportunity to profit fr…

I have come to the opinion that every successful tech company is basically just an arbitrage scheme to avoid regulations and extract value based on that advantage. Airbnb for unlicensed hotels. Uber for unlicensed taxis. Amazon for whitewashing fraudulent products. Bitcoin for unlicensed securities and laundering money. The pattern is upsetting.

Bitcoin is not a company

Re: OpenAI fires an employee for prediction market insider trading

#65

Post by somenameforme »

juleiie wrote: post #32
throwaway5752 wrote: post #27

Earlier quoted context omitted.

Prediction markets exist to bypass gambling restrictions and monetize insider trading. It isn't a problem, it is their raison d'etre.

Yeah but someone has to give the money to the insider traders. Betting and insider gambling wouldn’t work if people were educated and just didn’t gamble and so never used these platforms in the first place. It’s an old question of whether government is responsible to protect people from themselves or should we give everyone freedom to go bankrupt in this specific way if they so desire. I don’t know if there is a heal…

Many, I suspect the overwhelming majority, of the markets are impossible to engage in insider trading in. So it's genuinely just an interesting way to monetize expertise. Chess is a great example. A lot of the money in that market is people turning on the latest chess engines and betting in accordance to position evals, but skilled players can see much more - like how a position that the computer gives as a dead drawn is, in reality, extremely difficult for one side to hold. So the market might give near 50% when it's perhaps more like 65/35. That's quite a large edge. There's also quite a lot of opportunities for arbitrage betting, which is by definition risk free.

Re: OpenAI fires an employee for prediction market insider trading

#66

Post by twoodfin »

gtowey wrote: post #51
parineum wrote: post #43

Earlier quoted context omitted.

That's what happens when the majority of people don't actually support the regulations. If people thought it was wrong to be an unlicensed airbnb or uber, they wouldn't use them. In reality, those regulations are mostly protection rackets and most people don't care about violating them.

I disagree. When you give people strong economic incentives to ignore morality, some people will. Not all, but enough to make a hash of things. In any population there will be some people who will do things they know are wrong just to get ahead. For Airbnb landlords I'm sure the thought process goes like " I'm just one person so I can't be having enough of an impact to be a problem. And besides, I need the money." Bu…

I’m struggling to understand the moral character of taxi service regulatory capture and monopolization.

Re: OpenAI fires an employee for prediction market insider trading

#67

Post by gtowey »

holmesworcester wrote: post #50
gtowey wrote: post #28

Earlier quoted context omitted.

Insider trading is the raison d'etre of these products.

Isn't insider trading on a prediction market only wrong to the extent the insider is violating some duty of secrecy to the company? And isn't that just between them and their company in a case-by-case sense? If there was some valuable-to-the-public information that the company did not care about keeping private but just hadn't bothered to make public, for whatever reason, and an insider traded on it on a prediction m…

The thing is you're still thinking of these insiders as someone who just got a juicy stock tip from a relative.

The much more serious problem is when these insiders actually have their hands on the levers which decide the outcome. It's really no different than a mobster who bets a bunch on money on an unlikely outcome then threatens one side to throw the match.

What possible economic benefit is there to society to allow ordinary people to bet in markets like that?

Would you really like to live in a world where "Will we nuke Iran?" Is a bet you can make? Then someone in government sees how much money they could make if they bet yes & push the button?

Re: OpenAI fires an employee for prediction market insider trading

#68

Post by jacquesm »

ajkjk wrote: post #63
jacquesm wrote: post #59

Earlier quoted context omitted.

The perfect example is speed limits: everybody thinks they're good and yet they all seem to classify all other drivers into two categories: slowpokes and maniacs. Nobody seems to be able to agree on what a responsible set of rules is around the speed of vehicles.

This is entirely made up? Most people are totally fine with speed limits being what they are and don't say anything about it.

Oh, that explains the massive difference in speed limits from one country to another then, especially if they're next door neighbors.

Re: OpenAI fires an employee for prediction market insider trading

#69

Post by fsckboy »

Hamuko wrote: post #30
gtowey wrote: post #28

Earlier quoted context omitted.

Insider trading is the raison d'etre of these products.

Yeah, Polymarket is explicitly advertising this. > Research shows prediction markets are often more accurate than experts, polls, and pundits. Traders aggregate news, polls, and expert opinions, making informed trades. Their economic incentives ensure market prices adjust to reflect true odds as more knowledgeable participants join. > If you’re an expert on a certain topic, Polymarket is your opportunity to profit fr…

>Yeah, Polymarket is explicitly advertising this

no, they are not.

you might have been an insider working on the Apple Newton, and being enthusiastic about it you might have broken the rules and traded on your "knowledge"... and you would have lost your shirt. Same with your very knowledgeable enthusiasm about myriad other technologies. Ever wonder why Wall St doesn't show up at HN asking everybody's opinion about AI in order to leverage that info into billions?

an important element of "the wisdom of crowds" is many bits of microknowledge. How many Teslas will be sold next year is very dependent on how much the people who buy Teslas will earn next year (or how secure they will feel in their jobs) working in myriad other industries that have nothing to do with Tesla, along with the price of lithium, tires, and even ... wait for it... gasoline.

Polymarket's words you quote can just as likely refer to the wisdom of crowds. Or even, and this is the subtle part: Polymarket's insiders may believe, like you, that they are creating a market to trade on inside information, and yet they, like you, could be made wrong by the superior sum knowledge of the crowd exerting its invisible hands all together to tank your Apple Newtons.

Re: OpenAI fires an employee for prediction market insider trading

#70

Post by throwaway5752 »

somenameforme wrote: post #57
throwaway5752 wrote: post #27

Earlier quoted context omitted.

Prediction markets exist to bypass gambling restrictions and monetize insider trading. It isn't a problem, it is their raison d'etre.

Would you not say that somebody could equally cynically describe options trading in this way? Prediction markets are very valuable because they provide information on issues that's generally much more accurate than alternative sources, such as polls. For instance Polymarket predicted 94% of the results for the 2024 election a month out, including the presidential. It can also provide more information than the news. F…

Help me understand the relatively regulatory frameworks around each activity.
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