[dead]
Looking at the data behind prediction markets
51–55 of 55 posts
Re: Looking at the data behind prediction markets
#52Earlier quoted context omitted.
My sense is that, for prediction markets to work, there needs to be some real knowledge/analysis/judgement spread across at least a material subset of participants. Simply aggregating random guesses is likely no better than any given random guess. Put another way there needs to be SOME signal buried in all the noise.
And there is. That's why they work. Prediction markets are not simply aggregating random guesses. Were you somehow under the impression that they were?
Not at all. Just saying that there needs to be knowledge/expertise/experience/etc. of some sort embedded beyond just a lot of people making random guesses and I’m not sure that wisdom of crowds always captures that.
Re: Looking at the data behind prediction markets
#53Earlier quoted context omitted.
My sense is that, for prediction markets to work, there needs to be some real knowledge/analysis/judgement spread across at least a material subset of participants. Simply aggregating random guesses is likely no better than any given random guess. Put another way there needs to be SOME signal buried in all the noise.
And there is. That's why they work. Prediction markets are not simply aggregating random guesses. Were you somehow under the impression that they were?
The article does not conclude that "they work." Also, work at what?
Re: Looking at the data behind prediction markets
#54Earlier quoted context omitted.
And there is. That's why they work. Prediction markets are not simply aggregating random guesses. Were you somehow under the impression that they were?
Not at all. Just saying that there needs to be knowledge/expertise/experience/etc. of some sort embedded beyond just a lot of people making random guesses and I’m not sure that wisdom of crowds always captures that.
But there is, that's the whole point. The more correct and better information you have, the more incentivized you are monetarily to place a wager that will pay off. And the more incentivized you are to place a much larger wager.
Meanwhile, people just making random guesses are more likely to be placing small wagers that are also just canceling each other out.
So the knowledge, expertise, experience that you are talking about is absolutely embedded into this. That is the whole point.
Re: Looking at the data behind prediction markets
#55Interesting read. Regarding the relationship between volume and accuracy, there need not be one in limit-order-book markets like Kalshi and Polymarkets. In theory, as long as quotes are accurate and adjust quickly to new information, there is no need (and no incentive) to trade since prices are efficient. This is the case in US equity markets: most price discovery occurs through quote updates, not through trades. Stu…
[flagged]