> the top 1% of users capture 76.5% of profits
This seems to be similar to OnlyFans, and the economy at large...
Who wins and who loses in prediction markets? Evidence from Polymarket
11–20 of 167 posts
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#12Wait- why isn't there any conflict of interest statement provided in this paper?
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#13Just curious but how are bets arbritated on these website? Meaning who decides if an outcome was yes or no? Answers to things like "Who will win the next Best Picture Oscar?" are fairly obvious and binary. Can we make bets whose answers are not binary yes/no? What about "Will celebraty X and Y break up?"? Does Polymarket go to X and Y to confirm if they broke up or something :D
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#14[flagged]
We have a grad student working on matching markets across venues. Not a trivial task at scale, but we hope to look at that eventually.
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#15We study trading gains and losses on Polymarket, the largest prediction market. Using 588 million trades ($67 billion in volume), we show that the gains are highly concentrated: the top 1% of users capture 76.5% of profits. Successful traders provide liquidity using limit orders that resolve favorably relative to realized outcomes while unsuccessful traders take liquidity using market orders. Monthly performance is w…
insider trading on events probably wouldn't show any trends, right? These are point in time events (they call them markets), but they are finite and short lived. An insider would be a one and done thing, so it would be pretty hard to spot them or trend any sort of month over month insider scheming imo. Also... > We study trading gains and losses on Polymarket, the largest prediction market This is not a natural thing…
Not meant to sound like AI, but most academic journals limit abstracts to 100 words, so they rarely feel natural...
I agree: insiders are hard to study because they are finite and short-lived. We're pretty confident there are insiders out there trading on Polymarket; however, our conclusion is that they don't account for a significant fraction of the total trading gains on the platform.
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#16Wait- why isn't there any conflict of interest statement provided in this paper?
Because it's not required and not common practice in our field at this stage. But none of us (I'm one of the authors) is affiliated with or has a financial interest in any prediction market platform.
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#17What's the baseline here - in a world where every person is betting randomly X times a month, what would the distribution look like? There'd still be a small percentage that wins most of it, right?
We don't know the exact benchmark, but your insight is correct. We provide a simulation similar to what you have in mind towards the end of the paper, but you can generate almost any distribution you want by fine-tuning a simulation...
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#18> the top 1% of users capture 76.5% of profits This seems to be similar to OnlyFans, and the economy at large...
Yes, power laws are everywhere. The exact shape of each distribution varies, however, and little is known empirically about the distribution of trading profits in financial markets.
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#19Wait- why isn't there any conflict of interest statement provided in this paper?
Because it's not required and not common practice in our field at this stage. But none of us (I'm one of the authors) is affiliated with or has a financial interest in any prediction market platform.
Thanks for the clarification. Given the scrutiny on these platforms, this is timely done. Thanks.
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#20[flagged]
I don't think that's surprising because the alternative would be that some people are able to predict the future. Whatever strategy one might figure out that works is long term destined to fail, as other people start using them. The only real way to make money there is by providing liquidity since it's a zero sum game. For the stock market this is not true because it's not zero sum, it grows over time.