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Prediction markets are ushering in a world in which news becomes about gambling

theatlantic.com

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Re: Prediction markets are ushering in a world in which news becomes about gambling

#441

Post by fasterik »

csomar wrote: post #176
dghlsakjg wrote: post #133

Earlier quoted context omitted.

You forget that people are not necessarily doing this for rational reasons. Some people do it for for entertainment, some people are gambling addicts, some people think they have a strong grasp or inside knowledge when they don't. It is, at root, a casino. Apply your lens to any casino game, and it shouldn't exist (some very narrow exceptions apply in the casino).

It is not a casino in the sense that in the casino you are better against the house. Polymarket is basically an arbiter with financial infrastructure.

Not all casino games are played against the house. The best analogy would be a game like poker, where the house takes a small percent of every pot (the rake). Other than that, money changes hands between players. The game has an element of randomness and luck but there is also a large element of skill. Players have a wide range motivations and skill levels, from casual players and thrill-seekers to professional players.

Re: Prediction markets are ushering in a world in which news becomes about gambling

#442

Post by smeej »

gpm wrote: post #257
smeej wrote: post #256

Earlier quoted context omitted.

But the hitman still does not get the entire value of the contract. The hitman gets the value of the number of shares he can afford to buy, but that's not the whole contract by any means. I think I understand what you're saying about the pricing. Am I correct in saying, then, that if the odds are 90% in favor of my living through the contract, the "No, smeej won't die today" price should be close to $0.10 (again, ign…

Yes - we agree on how the pricing and odds work now :) The hitman shouldn't expect to capture the value of the entire open interest. The market here is serving to negotiate the bounty with speculators betting that too much was offered taking the rest (a privilege they pay for by buying contracts that only pay out if they don't take too much). It's a curious form of negotiation since the people paying for the murder d…

It's only a huge payout if you have a huge amount of money. If you have $1k to put in, you get $2k out. Who's risking getting caught and potentially facing the death penalty for $1k in profit?

If someone already has significant money backing, and especially if that person already has some other specific reason to want you dead, I can see how it might be added incentive, but even so, you also now have to tip your hand. To buy in hard, you have to send a signal saying you have reason to be confident I'm about to die. You're basically shooting yourself in the foot right before trying to shoot me in the head.

Plus, it's not like the markets are anonymous. Polymarket isn't trading with Monero. You're not just tipping your hand ahead of time. You're pointing the investigators right at yourself.

I just don't see how the calculations end up falling in favor of killing somebody if you weren't already planning to do so.

Re: Prediction markets are ushering in a world in which news becomes about gambling

#443

Post by tech_ken »

alphazard wrote: post #409

The headline is part of a widespread trend of the word "gambling" being used as synonymous with "betting". This new use isn't constructive, as it makes it difficult to talk about either precisely. Betting (risking something known for a payout which is uncertain), is ubiquitous in life, and really any game where the participants don't have perfect information. You are betting even if you don't realize it. You can't op…

> If we evolved to be more rational, then the phenomenon probably wouldn't exist.

I strongly disagree here, I think the phenomenon is in fact part and parcel with the evolution of our rationality. Betting (as you accurately describe) is an intrinsic part of life, and rationality (as I understand) is our evolved response to wrangling that uncertainty. It shouldn't be surprising that the evolutionary reward mechanism for acting rational (big oxytocin hit when you predict something correctly) could get miscalibrated for a subset of the population; that's just biology.

I also think you're making a massive error by conflating criticism of betting with criticism of betting markets, though. Nobody is upset about people dealing with the natural risk of day-to-day life; the problem is that people are now being incentivized to take on additional risk (beyond the day-to-day) which they are poorly equipped to reason about. The systems governing the dynamics of geopolitical events (or other things you can estimate in a betting market) are staggeringly complex, and assigning credences to them is an epistemological nightmare that even the most seasoned experts struggled to do reliably. These market brokers are using a framework of rationalism/"wisdom of the crowds" as a cover to sucker non-expert consumers into what truly is gambling in the sense that you describe it. In principle a person could probably lay accurate odds on a horse race too, but the average punter is never doing that and the same is true of the majority of polymarket users.

Re: Prediction markets are ushering in a world in which news becomes about gambling

#444

Post by woah »

eru wrote: post #306
misja111 wrote: post #271

I read the article but failed to grasp what exactly the disaster is that America would be walking into. Is the reliability of Polymarket predictions overhyped? Sure. Is there manipulation of Polymarket odds by some people? Most likely there is. But to say that this is a disaster that America is walking into is nothing else but clickbait.

I guess journalists don't like markets?

Journalists like writing about America walking into disasters

Re: Prediction markets are ushering in a world in which news becomes about gambling

#445

Post by tech_ken »

smeej wrote: post #127

> The irony of prediction markets is that they are supposed to be a more trustworthy way of gleaning the future than internet clickbait and half-baked punditry, but they risk shredding whatever shared trust we still have left. The suspiciously well-timed bets that one Polymarket user placed right before the capture of Nicolás Maduro may have been just a stroke of phenomenal luck that netted a roughly $400,000 payout.…

> I'm trying to understand what the criticism is here, because the example seems to support the point that these are meant to be a way of learning the future, not oppose it. I thought the whole point was that yes, people with inside knowledge will bet large sums of money on things they expect to happen, and that's what makes the prediction useful. The market is meant to incentivize people who know things to act on them in a way that makes them known.

You're ignoring the critical issue of timing. It's one thing to crowd-source knowledge in a steady, homogenous way. It's quite another for an actor with material knowledge of the situation to exploit this dramatic information asymmetry to turn a profit, revealing the new information at the last possible timepoint it could be used to lay a wager. Insider trading is quite different from a Hayek-style price signalling, and it's the same here. In principle (and on long time-scales) these markets can incentivize important information to come to light sure, but in infinite time we're all dead anyways. The short-time dynamics matter a lot more, from a social welfare perspective.

Re: Prediction markets are ushering in a world in which news becomes about gambling

#446

Post by bluGill »

nemomarx wrote: post #383
banannaise wrote: post #379

Earlier quoted context omitted.

Talking about "traditional" sports gambling rather than prediction markets: how do we account for the heavy restrictions they place on "sharps" (consistent winners)? If a game can be won through application of skill, but winning through application of skill causes you to be effectively banned, then the game cannot be won through application of skill.

Phrase it like this - market makers and casinos and other hosts really don't want it be a game of skill.

They don't mind a few with skill so long as those people don't win too often and they brag about their winnings to others who then think they have skill.

of course if you had the skill to win big why would you not make that your job thus making too much.

Re: Prediction markets are ushering in a world in which news becomes about gambling

#447

Post by flyandscryaway »

mminer237 wrote: post #392
TZubiri wrote: post #358

Earlier quoted context omitted.

I think as this becomes a reality, in general people will stop trading so close near the deadline for so little gain.

As it gets closer to the deadline, the timeframe shortens, so the gain does increase. A 1% return which you're paid on tomorrow is a 3,778% annualized return.

There’s still limited liquidity. You need to find someone willing to put up a very large amount of money for almost no gain. I also doubt these websites have enough activity to well calibrate near 1 dollar bets, so it’s not clear the market is giving you accurate predictive power with very expensive bets, which means you’re risking a lot (again, for almost no gain).

Re: Prediction markets are ushering in a world in which news becomes about gambling

#448

Post by neutronicus »

bsder wrote: post #303
entropyneur wrote: post #285

Earlier quoted context omitted.

Stock market integrity is important because of their function in the economy. Scamming of gambling addicts is tragic but not detrimental to society.

> Scamming of gambling addicts is tragic but not detrimental to society. I used to believe that. With the legalization of all the sports betting and how fast it can drain a gambler which can then affect the gambler's family, I'm now pretty much on the other side of the fence. Just like we banned public smoking because of the effects of secondhand smoke, I'm pretty convinced that the secondary effects of gambling mean…

Sports betting is particularly galling because the actual prediction is so unimportant. The only real reason to care whether Jontay Porter is credited with three or fewer rebounds in a basketball game is to win a bet about it.

You're encouraging people to waste their money just so that you can use the Wisdom of Crowds to predict something completely worthless.

Re: Prediction markets are ushering in a world in which news becomes about gambling

#449

Post by flyandscryaway »

lifestyleguru wrote: post #220
echoangle wrote: post #137

Earlier quoted context omitted.

Yes, OOP might have chosen a suboptimal example here. But for general newsworthy events, people aren’t going to be in positions to manually make them happen. And no person in a position to start a war would do it to affect a Polymarket bet.

> And no person in a position to start a war would do it to affect a Polymarket bet. No person in position to start a war and to influence economic policies would become a crypto scammer... erm wait...

Also, the crypto scammer in chief’s son is on the board of both major prediction market platforms.

Causing real world problems with prediction markets would probably be about ego and trolling.

I also find a clear political bias in the naming of some of the markets, but that could be simply because of the demography of the user base.

Re: Prediction markets are ushering in a world in which news becomes about gambling

#450

Post by usefulcat »

terminalshort wrote: post #316
cjs_ac wrote: post #275

> These markets are also manipulable. In 2012, one bettor on the now-defunct prediction market Intrade placed a series of huge wagers on Mitt Romney in the two weeks preceding the election, generating a betting line indicative of a tight race. The bettor did not seem motivated by financial gain, according to two researchers who examined the trades. “More plausibly, this trader could have been attempting to manipulate…

This is just implausible. Nobody with a brain is going to throw away 4 million on the speculative hope that a prediction market price is going to magically manipulate media coverage on the election.

It's not much different than other forms of advertising.

Compared to typical total advertising expenditures during a presidential election, my guess is that $4M is close to a rounding error.

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