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Who wins and who loses in prediction markets? Evidence from Polymarket

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Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#31

Post by AnimalMuppet »

Retr0id wrote: post #25
locallost wrote: post #20

Earlier quoted context omitted.

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.

"predicting the future" and "correct analysis of all available information" often aren't all that different.

From Schlock Mercenary (quoted from memory, may be inexact):

"You cannot see the future. All we are given is the present."

"Of course. But if you look closely at the present, you can find loose bits of the future just laying around."

Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#32

Post by dheera »

locallost wrote: post #20
SamTinnerholm wrote: post #3

[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.

The stock market is arguably zero sum as well, just that directionally betting on the US has generally worked during the golden years of the US economy.

The stock markets of the world aren't a money printer.

Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#33

Post by skybrian »

Retr0id wrote: post #28
postflopclarity wrote: post #10

Earlier quoted context omitted.

this comment was clearly written by AI. please don't do that.

Not sure why you were downvoted/flagged, because you're right. It is also quite an insightful comment worthy of discussion so I'm a little conflicted.

I don’t see why it’s AI, but even if it is, it’s better than most human comments so the complaint should be downvoted.

Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#34

Post by Terr_ »

goncalo-r wrote: post #4

What'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?

To relate it to a more-general economic article that has stuck with me for a while:

> If you simulate this economy, a variant of the yard sale model, you will get a remarkable result: after a large number of transactions, one agent ends up as an “oligarch” holding practically all the wealth of the economy, and the other 999 end up with virtually nothing.

https://www.scientificamerican.com/article/is-inequality-ine...

Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#35

Post by amelius »

vcf wrote: post #18
perlgeek wrote: post #11

> 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.

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 that I'm starting to wonder if we should have laws against power laws, like we have in engineering when we try to make things stable.

Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#36

Post by Retr0id »

skybrian wrote: post #33
Retr0id wrote: post #28

Earlier quoted context omitted.

Not sure why you were downvoted/flagged, because you're right. It is also quite an insightful comment worthy of discussion so I'm a little conflicted.

I don’t see why it’s AI, but even if it is, it’s better than most human comments so the complaint should be downvoted.

Take a look at the user's history, it's more obvious in context. It has a lot of claude-specific tells which are noticeable if you've spent time working with claude. AI-generated comments are against the HN guidelines https://news.ycombinator.com/newsguidelines.html#generated

Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#37

Post by solarkraft »

fantasizr wrote: post #24
perlgeek wrote: post #11

> the top 1% of users capture 76.5% of profits This seems to be similar to OnlyFans, and the economy at large...

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.

This is (possibly what you’re thinking of) a requirement in the EU for CFD trading providers. Providers have to (somewhat prominently) state in all of their ads what percentage of traders loses money using the product.

Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#38

Post by manas96 »

matusp wrote: post #13
manas96 wrote: post #8

Just 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

https://docs.polymarket.com/concepts/resolution

Interesting. Any (in)famous UMA vote debates? Or interesting Unknown/50-50 outcome resolutions?

Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#39

Post by skybrian »

Retr0id wrote: post #36
skybrian wrote: post #33

Earlier quoted context omitted.

I don’t see why it’s AI, but even if it is, it’s better than most human comments so the complaint should be downvoted.

Take a look at the user's history, it's more obvious in context. It has a lot of claude-specific tells which are noticeable if you've spent time working with claude. AI-generated comments are against the HN guidelines https://news.ycombinator.com/newsguidelines.html#generated

Maybe the guidelines should be changed? Something about: don’t complain about comments just because they’re AI.

Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#40

Post by fantasizr »

solarkraft wrote: post #37
fantasizr wrote: post #24

Earlier 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.

This is (possibly what you’re thinking of) a requirement in the EU for CFD trading providers. Providers have to (somewhat prominently) state in all of their ads what percentage of traders loses money using the product.

Interesting, would love to see that applied here. Every third ad is about how I can make money on the weather.
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