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Who wins and who loses in prediction markets? Evidence from Polymarket
121–130 of 167 posts
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#122> We find that the most successful users traded frequently in sports markets, often for different teams (81% of the gains) Am I missing something or is this almost the whole story? Sports betting apps ban users who are too successful. Polymarket doesn’t. So if you have a killer football game prediction algorithm you’ll only be able to use it for so long on sports betting apps, but Polymarket won’t ban you. Plus the a…
I always wondered if you could compare odds on the most advanced sports betting apps and those on futures markets and exploit any big diffs between the two.
There are people who have been doing this in Vegas for years.
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#123> We find that the most successful users traded frequently in sports markets, often for different teams (81% of the gains) Am I missing something or is this almost the whole story? Sports betting apps ban users who are too successful. Polymarket doesn’t. So if you have a killer football game prediction algorithm you’ll only be able to use it for so long on sports betting apps, but Polymarket won’t ban you. Plus the a…
> Sports betting apps ban users who are too successful. Polymarket doesn’t.
Polymarket is set up as a market between users. Someone has to be on the other side of the trade.
With betting apps, the house is on the other side of the trade. If you're too good they choose not to trade with you.
The alternative for the betting apps is to give worse payouts to everyone to cover for the wins of the long-tail experts. This would degrade the experience for the average bettor on the platform. Maybe that would be a good thing because it would discourage them from playing, but I digress.
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#124Earlier quoted context omitted.
I have a dumbed down version of this question as variant of the Voight-Kampff test (Bladerunner) that goes like this. You have 2 choices for how the world is shaped, pick 1: A. You have a modest but comfortable home, a job that pays you enough so that you have what you need and can afford occasional luxuries (e.g., an annual holiday abroad), have good health insurance, access to education and childcare, etc. Everybod…
I really hate to call people stupid, but I would actually go ahead and call people who choose option B idiots. I'm sorry if that offends anyone reading this, you can downvote me out of spite if that makes you feel better. I say this because I read a while ago (like years) an article in the Economist showing that happiness in a society is correlated with equality - (sorry for the dash I am a human I just happen to use…
Its a completely false dichotomy. You can have everyone choose A and still get B. The same faulty thinking always leads to populism, then extremism, then atrocity. So for the love of all that is holy, learn some economics or STFU on the topic.
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#125Earlier quoted context omitted.
Yeah if you look at the Boltzmann Wealth Model, where every actor gives away 1 dollar to a random person, and you repeat this, then if you start with an equal wealth distribution, you end up with an exponential wealth distribution. That shows how strong exponential curves are :) A few "lucky" individuals become very wealthy, while the vast majority of people end up with very little or nothing. The effect is so strong…
I mean, do we want the economy to be stable? Not in a 'oh the rich don't so they control the media and so we don't' sorta way. But like in a 'lets educate people on the pluses and minuses, debate a while, and then come to an informed conclusion' sorta way. Like, deep down, does the average person actually want a stable economy? Because it seems to me that there is an even split historically between the folks that wan…
If you ask people what they want, they'll request some impossible combination of attributes without consideration of any tradeoffs.
They will also try to push all negative externalities on to people wealthier than themselves. Most people see themselves as middle class or lower middle class, even up to relatively high income levels. If you ask each of them where the tax rate should be increased, the answer is usually a few steps higher than their own income.
UBI is a topic where this becomes very obvious. When you explain UBI to most people they assume they will be receiving the UBI and some abstract combination of billionaires and corporations would pay for it. Then you show them the math that it wouldn't work and they start to become less enamored with the idea. (Or lately: They just don't believe you and retreat to their imagined ideal free of pesky economics)
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#126Great paper. Still digesting after a first pass, but it looks really solid. Quick question: did your team consider the implications of capital recycling on the maker side? Liquidity providers tend to have superior tech and information, so the general edge is expected. However, the ability to effectively reuse the same capital to sell outcome sets seems like it could offer a scale advantage that enables them to captur…
Thanks! No, we haven't looked at the capital "locked" in these markets (which is important considering there is no margin trading, at least not yet). Most markets have a short horizon, but some have very long ones. It gets very complicated very quickly because it's not always the case that you open a position and then close it (you get partial fills, users closing partial positions, etc.). Taking that into consideration would make liquidity providers look even better than they do in our study. Not having their capital locked allows liquidity providers to trade more and earn more per trade on average. Trading on margin would allow liquidity takers to lose more money more quickly (this is an educated guess; you never know what the outcome of a new policy would be until you implement it).
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#127Earlier quoted context omitted.
these apps should load with this pie chart showing your likelihood of ever making a profit based on what they know about you. "YOU WILL LOSE MONEY ON THIS APP". Like the cigarette packs.
Just look at lotteries. I don't believe in them because when you consider operational costs, less money comes out of the lottery than goes in, so if everyone simply didn't bet on the lottery, they would have more money than if they bet on it. But everyone who bets thinks "but what if I win?"
That ”but what if I win” is realistically what you’re paying for if you buy a ticket.
Maybe the sum of enjoyment lottery participants get from daydreaming about winning is >= the cost of running the lottery?
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#128> We find that the most successful users traded frequently in sports markets, often for different teams (81% of the gains) Am I missing something or is this almost the whole story? Sports betting apps ban users who are too successful. Polymarket doesn’t. So if you have a killer football game prediction algorithm you’ll only be able to use it for so long on sports betting apps, but Polymarket won’t ban you. Plus the a…
The most money can be made in markets which have the worst correlation between reality and the market price. There are types of markets on PM which are very far from reality. There are types of markets which are very close to reality. It isn't surprising that sports markets are in the first category. There are also political markets, where it is clear campaigns manipulate the prices for the same reasons they will pub…
> There are types of markets on PM which are very far from reality. There are types of markets which are very close to reality. It isn't surprising that sports markets are in the first category.
I think you're claiming here that sports markets are "very far from reality". What do you mean by that? Scores, injuries, fouls, etc are very well documented and objective things, so I can't figure out what you mean by "far from reality". If anything, these markets seem exceptionally "real", with well defined criteria and outcomes.
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#129Earlier quoted context omitted.
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.
When the abstract is limited, you don't add useless qualifiers like "the largest prediction market"
This is a familiar style in abstracts. Weird as it sounds, it’s normal to have some language implying the reader is a hermit living in a cave. If it sounds like something an AI would say, maybe it’s because models have been trained on academic papers?
Re: Who wins and who loses in prediction markets? Evidence from Polymarket
#130> We find that the most successful users traded frequently in sports markets, often for different teams (81% of the gains) Am I missing something or is this almost the whole story? Sports betting apps ban users who are too successful. Polymarket doesn’t. So if you have a killer football game prediction algorithm you’ll only be able to use it for so long on sports betting apps, but Polymarket won’t ban you. Plus the a…
The most money can be made in markets which have the worst correlation between reality and the market price. There are types of markets on PM which are very far from reality. There are types of markets which are very close to reality. It isn't surprising that sports markets are in the first category. There are also political markets, where it is clear campaigns manipulate the prices for the same reasons they will pub…
Interactive brokers have prediction markets open to usa people