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I Championed Prediction Markets. Look What They've Become

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Re: I Championed Prediction Markets. Look What They've Become

#31

Post by Planktonne »

00dazzle wrote: post #27
Planktonne wrote: post #4

The author was instrumental in a colleague ruining their life through a gambling addiction. Then they helped make the case for prediction markets, which also went wrong. Their track record is not great, and I don't think they fully realise that the issue is them: the principles and axioms they rely on don't lead to good results. > I don’t claim to know the exact right policy answer for America. Perhaps start by rever…

I don’t think we should hold a transaction worth $5 someone did as a teenager over their head as a dark mark on their character for the rest of their life

I would agree, except the author has continued behaviour in that pattern over a larger scale for years after that.

Re: I Championed Prediction Markets. Look What They've Become

#32

Post by Planktonne »

fwipsy wrote: post #24
crooked-v wrote: post #23

Earlier quoted context omitted.

Day trading is gambling. Buy-and-hold is investing. Algorithmic micro-trading is investing, despite looking like gambling. It's about whether there's an immediate dopamine release or not.

Properly regulated, couldn't the same distinction be applied to prediction markets?

Except the author argued against regulation for prediction markets.

Re: I Championed Prediction Markets. Look What They've Become

#33

Post by mind-blight »

I don't like prediction markets, but I think a lot of people in this thread are assuming that gambling vs. not is clear cut.

Insurance was illegal at different times in history because it was considered gambling. Ditto for commodity trading.

Even you look at the structure of a futures contact, the basics look really similar to a bet that can be traded with someone else.

The main differences are the regulatory environment, and the intention the actors in the market have.

Commodities, options, and futures are all legitimately used to hedge against future outcomes. The "gamble" (placing money on a future outcome) is a mechanism for the main goal: protection against instability.

When you look at stocks and - in particular - derivatives, it starts to look a lot closer to how gambling is structured. I'm pro stock market, but that doesn't mean I won't admit that the line between it and gambling is pretty hard to draw. It's a lot more grey than people give credit for

Re: I Championed Prediction Markets. Look What They've Become

#34

Post by dabinat »

avaer wrote: post #14

> Trump Media may soon sell early access to the president’s Truth Social posts. Think about whether the spirit of the domestic/foreign emoluments clause would be okay with this. I'm sure some will argue there's enough layers of BS in this scheme that it's totally fine. Ethics and judgement aside, I think startup founders can learn a lot from this administration as to how "successful" people twist things in their favo…

The law only matters if there’s someone willing to enforce it. We learned from Trump’s first term that no-one is willing to enforce the emoluments clause.

Re: I Championed Prediction Markets. Look What They've Become

#35

Post by gaze »

is this the author's attempt at washing their hands of the damage they've done? Smart enough to win all these prestigious economics awards and hold all these prestigious positions but too naive to be able to predict the consequences of what they've been fighting for? Things that were, in my opinion, very easy to predict, given all the regulation in place around existing markets. What does this say about the author and the field of economics? Every day we get to play the "dumb or awful?" game.

Re: I Championed Prediction Markets. Look What They've Become

#36

Post by fwipsy »

Planktonne wrote: post #32
fwipsy wrote: post #24

Earlier quoted context omitted.

Properly regulated, couldn't the same distinction be applied to prediction markets?

Except the author argued against regulation for prediction markets.

Did he argue for the current implementation, or only for deregulation relative to the previous state? As I understand it, up until recently they were totally illegal.

Re: I Championed Prediction Markets. Look What They've Become

#37

Post by waisbrot »

mind-blight wrote: post #33

I don't like prediction markets, but I think a lot of people in this thread are assuming that gambling vs. not is clear cut. Insurance was illegal at different times in history because it was considered gambling. Ditto for commodity trading. Even you look at the structure of a futures contact, the basics look really similar to a bet that can be traded with someone else. The main differences are the regulatory environ…

> Insurance was illegal at different times in history because it was considered gambling.

And it was, in fact, gambling. You could take out a life insurance policy on anyone without any relationship with them.

Re: I Championed Prediction Markets. Look What They've Become

#38

Post by fwipsy »

Planktonne wrote: post #21
fwipsy wrote: post #16

I'll admit that I still see some value in prediction markets in theory, but in practice the way they were implemented seems to have caused an order of magnitude more harm. In retrospect their misuse as a loophole for sports gambling was an obvious outcome. Seems like every promising new technology inevitably is used for evil. Cryptocurrency is mostly used for criminals. Social media displaced more meaningful forms of…

> In retrospect their misuse as a loophole for sports gambling was an obvious outcome. This isn't a 'benefit of hindsight' thing; a lot of people called this out in advance, just like all the other tech you listed. We need to stop listening to the people who are wrong about everything, rather than pretending the maximalist seeking of profit with no regulation is a reasonable position. We know it doesn't work.

I guess most of my positions on prediction markets came from Scott Alexander, e.g. https://www.astralcodexten.com/p/prediction-market-faq which was posted in 2022. The implicit argument seems to be "We should come up with some way to regulate these so that it's less harmful than existing forms of gambling." I think the part that was harder to foresee was the Trump admin suddenly seizing on them as a loophole to override state regulation of sports betting. Certainly there does not seem to have been any careful consultation with prediction-market experts to determine the most robust, socially beneficial laws.

I understand that "Things would be great if they'd done it right!" is in some sense unfalsifiable. But also I think it's pretty clear that the current regime is geared solely towards maximizing the profits of prediction market companies and Trump Jr.

Re: I Championed Prediction Markets. Look What They've Become

#39

Post by ares623 »

fwipsy wrote: post #24
crooked-v wrote: post #23

Earlier quoted context omitted.

Day trading is gambling. Buy-and-hold is investing. Algorithmic micro-trading is investing, despite looking like gambling. It's about whether there's an immediate dopamine release or not.

Properly regulated, couldn't the same distinction be applied to prediction markets?

Yes. Banning is also considered proper regulation

Re: I Championed Prediction Markets. Look What They've Become

#40

Post by runarberg »

fwipsy wrote: post #20
indoorfish wrote: post #17

Earlier quoted context omitted.

Gambling isn't some brilliant new idea, even if you rename it. I understand the technical distinction trying to be made, but seriously, it's gambling. No one "bungled" anything. They just aren't being prosecuted..yet.

Sometimes gambling has some social value then. Isn't trading on the stock market gambling? Do you also support abolishing the stock market? What about issuing loans to someone with poor credit?

> Do you also support abolishing the stock market?

An anti-capitalist here: Yes... Oh heavens, yes. There are few things I desire more then to see all the stock markets in the world burn and never to be rebuilt. For me, people who make money at the stock market are participating in a systematic exploitation of the working classes. The siphoning of profits away from the workers who created them and earned them, and into the hands of the rich who contribute nothing, yet get everything.

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