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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

#61

Post by trgn »

bee_rider wrote: post #55
amelius wrote: post #35

Earlier 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…

Sigmoid wealth tax maybe?

that's what progressive taxation is

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

#62

Post by pstuart »

Balgair wrote: post #52
amelius wrote: post #35

Earlier 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…

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. Everybody else has the same thing, and because of this you live in communities where the arts flourish because nobody has to worry about becoming homeless or destitute.

B. You live in magnificent mansion, one of dozens you own around the world (accessible via one of your personal Gulfstream jets). You have more money then you could ever spend in a lifetime (even recklessly). Your homes are staffed with obedient servants who cater to your every desire. I mean anything. You own them. Your mansions are on palatial estates with secure walls and guards to keep out the rabble outside -- who fight for scraps and are desperate enough to do any kind of work to keep your factories humming and printing cash.

I wouldn't hesitate to choose A because that's a world I'd love to live in and the world of B horrifies me. I don't say this as virtue signaling, it's my innate reaction.

I think that a significant portion of the population would love to choose B. And in some ways, some already have.

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

#63

Post by 11101010010001 »

glitchc wrote: post #30
Retr0id wrote: post #25

Earlier quoted context omitted.

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

A sufficiently large market is indistinguishable from Brownian motion.

That's a model.

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

#64

Post by [deleted] »

Retr0id wrote: post #56
dheera wrote: post #43

Earlier quoted context omitted.

Not really. Not all players in prediction markets are rational players. A good chunk of it are there for entertainment, and analyze things incorrectly; you can take the other side of those trades, and you won't need to predict the future.

Deciding that someone else's prediction is wrong is a prediction in and of itself.

[deleted]

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

#65

Post by postflopclarity »

Retr0id wrote: post #51
postflopclarity wrote: post #47

Earlier quoted context omitted.

I'm not complaining "just" because it's AI. I'm complaining because it's AI, and also slop. > resolves into "cross-venue infrastructure" — which is also a more durable edge than within-venue alpha anybody who actually trades knows that on these markets, "cross venue infrastructure" (aka vibe coding some exchange api integrations) is much less important / durable than actual alpha.

Slop aside, do you think it's reasonable to assume a decent fraction of those making consistent profits are arbitrage bots?

arbitrage is a rather overloaded word that people use for all kinds of strategies but yes, I predict most of the most profitable and consistent accounts are not actually attempting to forecast the outcome of these markets from first principles

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

#66

Post by nonethewiser »

amelius wrote: post #35
vcf wrote: post #18

Earlier quoted context omitted.

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…

>The effect is so strong that I'm starting to wonder if we should have laws against power laws

This is literally and unironically communism.

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

#67

Post by postflopclarity »

skybrian wrote: post #53
postflopclarity wrote: post #47

Earlier quoted context omitted.

I'm not complaining "just" because it's AI. I'm complaining because it's AI, and also slop. > resolves into "cross-venue infrastructure" — which is also a more durable edge than within-venue alpha anybody who actually trades knows that on these markets, "cross venue infrastructure" (aka vibe coding some exchange api integrations) is much less important / durable than actual alpha.

That sounds plausible. Not a trader so I wouldn't know. Saying at least a little about what's actually wrong with it seems more useful than just saying it's slop, which gives me very little info over just a downvote.

it's pretty easy to write basic trading api connectivity. the hard part is knowing what trades to send

even if we are very charitable and assume the comment refers only to like high-engineering-effort infra for trying to be super competitive on latency, that's still like the opposite of a durable edge, since everybody is looking at it. there's very little "hidden" knowledge and it's mostly a matter of elbow grease and careful engineering.

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

#68

Post by AlienRobot »

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.

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?"

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

#70

Post by amelius »

pstuart wrote: post #62
Balgair wrote: post #52

Earlier quoted context omitted.

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…

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 think most people want to earn more the harder they work, and I think that is fine.

However, power laws basically spoil it because it gives a hard worker an exponential advantage, where they can (and will) use that money against other people who made different life choices.

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