Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

OpenAI fires an employee for prediction market insider trading

wired.com

Post reply on HN
Print view View original

71–80 of 157 posts

Re: OpenAI fires an employee for prediction market insider trading

#71

Post by parineum »

lokar wrote: post #45
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.

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

That's none of their business.

There are already laws in place against the kinds of behavior that neighbors are afraid will happen.

Re: OpenAI fires an employee for prediction market insider trading

#72

Post by tyre »

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…

> Isn't insider trading on a prediction market only wrong to the extent the insider is violating some duty of secrecy to the company?

Yes.

Prediction markets, for corruption reasons, are regulated by the CFTC. In commodities markets, actors are assumed to be making trades based on propriety information. Hedging is the whole purpose!

> …like it's a stock market where there is some society-level interest in giving participants protection from having less information than insiders.

Ah, no!

Insider trading in the stock market is (usually) only illegal in your first case: when the person trading is violating confidentiality.

It is not about fairness.

Fairness is a poor proxy for whether specific trading is illegal.

For example:

If a company accidentally leaves a press release for a merger publicly available, I happen to guess the URL, and then I trade on it: Unfair (I have access to insider information that other market participants do not) but legal!

If I work at the company, am sent the press release to copy edit, and then trade on it: Illegal. I have a duty to the company not to trade on it.

Re: OpenAI fires an employee for prediction market insider trading

#73

Post by yuliyp »

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.

That's because they are slowpokes and maniacs: In a decently flowing road, the majority of distinct cars you see are either moving significantly faster or slower than you (and the more extreme the difference the more likely you are to see them). Of cars that go at a similar speed to you, they approach you / you approach them more slowly so you'll see fewer of them.

Re: OpenAI fires an employee for prediction market insider trading

#74

Post by tyre »

cjonas wrote: post #5

Insider trading is so trivial on the prediction markets. I'd guess that it's actually the "feature" that results in the outcomes being so accurate.

Yes and no.

If you see prediction markets as how they were originally pitched (price ~approximating likelihood), then insider trading is good. It provides discovery.

If you look at what prediction markets are today (gambling, especially on sports, especially in states that have banned it), then insider trading is bad. Particularly when the people trading can influence the outcome (e.g. a pitcher purposefully throwing into the dirt.)

Re: OpenAI fires an employee for prediction market insider trading

#75

Post by tyre »

cc-d wrote: post #21
Analemma_ wrote: post #13

Earlier quoted context omitted.

Manifold actually explicitly encourages insider trading, arguing that it leads to more accurate pricing. This was possibly defensible back when it was a cute funtime project run by a Bay Area polycule, but it’s probably going to get them in deep shit sooner or later, even though they don’t even use real-money betting.

The SEC only exists for dad to frame people. The vast majority of insider trading schemes are not prosecuted, many leave no evidence trail at all without going deep into black-op classified territory.

Prediction markets are regulated by the CFTC in the US.

Your point stands, for now at least, since the CFTC seems entirely uninterested in prosecuting or regulating.

Re: OpenAI fires an employee for prediction market insider trading

#76

Post by pigeons »

fsckboy wrote: post #69
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…

> 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 A…

>Yeah, Polymarket is explicitly advertising this

Yes they are. Polymarket has an ad glorifying a "fictional" scenario where someone gets a job as a janitor in a video game company to bet on related events in polymarket

Re: OpenAI fires an employee for prediction market insider trading

#77

Post by jstanley »

tyre wrote: post #72
holmesworcester wrote: post #50

Earlier quoted context omitted.

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…

> Isn't insider trading on a prediction market only wrong to the extent the insider is violating some duty of secrecy to the company? Yes. Prediction markets, for corruption reasons, are regulated by the CFTC. In commodities markets, actors are assumed to be making trades based on propriety information. Hedging is the whole purpose! > …like it's a stock market where there is some society-level interest in giving part…

I don't think your example refutes the fairness heuristic at all.

The first case is completely fair because anybody else could have done the same thing without any special access required.

The second case is unfair because you had to work at the company to get access.

Re: OpenAI fires an employee for prediction market insider trading

#78

Post by flessner »

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…

No, commenters here simply take into account that predictions markets have historically classified themselves as futures markets and not as gambling.

Allowing information asymmetry, like insider trading, undermines the regulatory argument that keeps these markets legal.

Re: OpenAI fires an employee for prediction market insider trading

#79

Post by vlovich123 »

iso1631 wrote: post #56
aleph_minus_one wrote: post #49

Earlier quoted context omitted.

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

People whose houses are robbed are against robbery, people who rob houses are very much for it.

That’s a false analogy.

You have two parties who want to enter into a contract and a third party unrelated to the contract that doesn’t for whatever reason. Just based on contract law and common sense the unrelated party shouldn’t have standing. Now if there’s externalities to the contract that impact that unrelated party sure, but only insofar as to get those externalities addressed.

This is not the same as a robbery which involves no contract or a willing counterparty to the robbery.

Re: OpenAI fires an employee for prediction market insider trading

#80

Post by ThePowerOfDirge »

throwaway5752 wrote: post #27
7777777phil wrote: post #19

77 suspicious positions across 60 wallets, 13 brand-new accounts appearing 40 hours before the browser launch. First confirmed case of a major tech company firing over prediction market trades. I wrote about why prediction markets have a structural insider trading problem that nobody's solved yet: https://philippdubach.com/posts/the-absolute-insider-mess-of...

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

Gambling = investing. Buying stocks is also gambling. Share buybacks, dividends, fancy words for forking money from workers to some joe schmoe that bought a lottery ticket, i.e., a stock.
Post reply on HN