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We haven't seen the worst of what gambling and prediction markets will do

derekthompson.org

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Re: We haven't seen the worst of what gambling and prediction markets will do

#681

Post by bit-anarchist »

Terr_ wrote: post #668
bit-anarchist wrote: post #644

Earlier quoted context omitted.

And the naysayers would be right. They come from two approaches: - Property rights: bettors are waging using their own property at their own direct risk. To prohitbit such a thing is to violate their property rights, plain and simple; - Information aggregation: prediction markets originally appeared to help make informed decisions about an event by proof-of-stake. If I'm not mistaken, this idea was originally develop…

> bettors are waging using their own property [...] To prohitbit such a thing is to violate their property rights This is technically true but doesn't deserve top-billing. Any fraudster or embezzler (or mugger or drunk-driver) will incidentally be risking some of their own property while exercising their right to control it. > informed decisions about an event by proof-of-stake A large chunk of the problem here occur…

In regards to first point, I might not have made it clear, but betting, on its own, does not harm others, contrary to mugging or hitting a car. Property rights come with the associated duty of respecting others' properties afterall. Failure to do will result in the duty to repair and pay to restore the "correct" state to best of their abilities.

Onto the second, I don't think the people you mentioned actually wager stuff that they don't own. To be more precise, the problem is that they use criminal means to "rig" the bet in their favor. That, at least, seems to be what OP is talking about with incentives.

Finally, regarding the last, I agree that roles that require trust should have more norms and rules to enforce that trust. In case of strictly private roles, I personally believe they should be done via contracts and cultural pressures. For governmental roles, they should be enforce by laws (such as the one you suggested). Since this is a top-level, abstract, description, we can get into more about more specific cases (such as CEOs).

Re: We haven't seen the worst of what gambling and prediction markets will do

#682

Post by HelloMcFly »

Miraste wrote: post #680
HelloMcFly wrote: post #677

Earlier quoted context omitted.

> Rigged wins aren't a real problem. Aren't a problem for whom, exactly? I'm not commenting here with concern about the prediction market businesses , founders, or shareholders. I'm concerned for the suckers who are and will continue to be taken advantage of. Forgive me for not abandoning all empathy for those suckers just because they don't realize they're being mugged. These prediction markets are zero-sum, with th…

Aren't a problem for the companies; I was responding to you saying they're incentivized to stop it. Believe me, I am not on their side. Gambling companies are a financial weapon aimed at the working class and a just society would shut them down. I don't blame you for assuming, though, given where we are.

Ah I hear you, makes sense

Re: We haven't seen the worst of what gambling and prediction markets will do

#683

Post by singleshot_ »

bit-anarchist wrote: post #644
epolanski wrote: post #640

Earlier quoted context omitted.

Also, I really feel like so many of the people defending prediction markets don't understand the very basics of economy and behavioral science: incentives. You're creating a legalized system with the incentives to influence events to make terrible stuff happen. We've already seen huge bets on the deadline of US attack to Venezuela spike few hours/days before the actual aggression. Which means that insiders not only h…

And the naysayers would be right. They come from two approaches: - Property rights: bettors are waging using their own property at their own direct risk. To prohitbit such a thing is to violate their property rights, plain and simple; - Information aggregation: prediction markets originally appeared to help make informed decisions about an event by proof-of-stake. If I'm not mistaken, this idea was originally develop…

Gambling -> bad gamblers lose -> bankruptcy -> creditors eat losses

Technically, a lot of gamblers are gambling someone else’s money, they just havens lost enough yet for it to matter.

If you want to bring back debtors prison I guess I’d be fine with legalized gambling. If I’m stuck holding the coupon, I’ll pass.

Re: We haven't seen the worst of what gambling and prediction markets will do

#684

Post by NoboruWataya »

AnthonyMouse wrote: post #678
NoboruWataya wrote: post #544

Earlier quoted context omitted.

> Notice that you can use the stock market in the same way as a prediction market. After that healthcare CEO got murdered the company's stock took a hit, as anyone could reasonably have predicted it would. That's a perverse incentive in line with betting that someone will kill the CEO. We don't really have a great way of preventing stock trading from creating that incentive, we mostly just rely on the fact that if yo…

> You'd need to short a lot of stock to make that worth the risk of murdering someone (leaving aside any moral issues obviously). When they know exactly when something is going to happen, buying put options that are cheap because they're slightly out of the money seems like it would be pretty effective. > I guess viewed in this way a bet on a prediction market is like a very cheap, highly leveraged bet on a specific…

> When they know exactly when something is going to happen, buying put options that are cheap because they're slightly out of the money seems like it would be pretty effective.

But you don't know exactly what would happen. You know what you will do, but not how it will affect the company's stock price. Maybe it will go down a little, maybe it will go down a lot. Maybe you kill the CEO on the same day as good news is published about the company, which offsets the drop. Or maybe the market just decides the guy wasn't that good a CEO anyway. So you bought a bunch of cheap puts with a strike price of 100, but the stock only drops to 101, and you lose everything. You can buy puts with a higher strike but they will be more expensive.

> Leverage gives them a larger incentive, but there are plenty of wages to place a leveraged bet in the stock market.

Yes, but they are expensive, is my point.

Generally, the disincentive outweighs the incentive. You can increase the incentive through leverage. But that also increases the costs, which increases the disincentive.

There may well be situations where the incentive outweighs the disincentive. But in the context of traditional financial markets I think those situations are likely very rare due to the risks and costs, whereas with a predictions market the risks and costs could be reduced, so it is more likely to happen.

Re: We haven't seen the worst of what gambling and prediction markets will do

#685

Post by AnthonyMouse »

NoboruWataya wrote: post #684
AnthonyMouse wrote: post #678

Earlier quoted context omitted.

> You'd need to short a lot of stock to make that worth the risk of murdering someone (leaving aside any moral issues obviously). When they know exactly when something is going to happen, buying put options that are cheap because they're slightly out of the money seems like it would be pretty effective. > I guess viewed in this way a bet on a prediction market is like a very cheap, highly leveraged bet on a specific…

> When they know exactly when something is going to happen, buying put options that are cheap because they're slightly out of the money seems like it would be pretty effective. But you don't know exactly what would happen. You know what you will do, but not how it will affect the company's stock price. Maybe it will go down a little, maybe it will go down a lot. Maybe you kill the CEO on the same day as good news is…

> But you don't know exactly what would happen. You know what you will do, but not how it will affect the company's stock price. Maybe it will go down a little, maybe it will go down a lot. Maybe you kill the CEO on the same day as good news is published about the company, which offsets the drop.

You never know exactly what would happen. You know what you will do, but not if the CEO is going to catch the flu and not show up that day, or have better security than you were expecting, or have a great surgeon, or a spouse who is willing to keep them on life support until after your prediction market contract expires.

> Yes, but they are expensive, is my point.

Only they're not. There are many ways to bet all or nothing on something people generally expect to have a <1% chance of happening, so that you either lose $1000 or make $100,000. Under normal circumstances you could make that bet 100 times in a row and lose $100,000 and the counterparty is happy to take all your money, but if you're able to do something to change the outcome yourself then it's different, which is why it's the same.

Re: We haven't seen the worst of what gambling and prediction markets will do

#686

Post by singleshot_ »

bit-anarchist wrote: post #676
epolanski wrote: post #654

Earlier quoted context omitted.

No, they would be wrong. Have them have a prediction market on whether their house will be arsoned tomorrow or they will be hit by a car and instantly they will recognize the danger of the incentives and the bs of "information hedging based on price discovery". Cause way worse events allow betting and profiting. Give me a break, we're at the complete decadence of society and its intellect. Nobody can recognize right…

I suggest that you think rationally about what you just said. Why wound anyone open a bet on "rando's house will be set on fire"? Why would they bet on "yes"? You can't present a generic case such as that without going into details about motivations and actual incentives. Those way worse events also have a lot of extra political motivations behind it. If someone starts a war with the sole intention of winning a bet,…

> Why wound anyone open a bet on "rando's house will be set on fire"? Why would they bet on "yes"?

Bettor is an impoverished arsonist with no morals and confidence in his anonymity.

Better question: why would a person ask a question with such a breathtakingly obvious answer?

Re: We haven't seen the worst of what gambling and prediction markets will do

#687

Post by epolanski »

bit-anarchist wrote: post #676
epolanski wrote: post #654

Earlier quoted context omitted.

No, they would be wrong. Have them have a prediction market on whether their house will be arsoned tomorrow or they will be hit by a car and instantly they will recognize the danger of the incentives and the bs of "information hedging based on price discovery". Cause way worse events allow betting and profiting. Give me a break, we're at the complete decadence of society and its intellect. Nobody can recognize right…

I suggest that you think rationally about what you just said. Why wound anyone open a bet on "rando's house will be set on fire"? Why would they bet on "yes"? You can't present a generic case such as that without going into details about motivations and actual incentives. Those way worse events also have a lot of extra political motivations behind it. If someone starts a war with the sole intention of winning a bet,…

Ay, didn't see your nickname, and your other posts.

Thanks for confirming what I said.

> And naysayers (which seem to be dropping from the same basket of NFT/crypto cultists) will tell you that this is about probability and information discovery.

Also, I ain't conservative, prediction markets, in their actual scope provide no benefits and plenty of wrong incentives.

The rest of your post makes no sense.

Plenty of world events have been impacted by people with misaligned interests, including by spies and double agents. Hell, wars in recent years have been started as distractions from internal political affairs.

And you want to argue to me that there's no people in position of power that may want to influence events they can bet on?

There's a reason why we prevent people in sport from betting: it's a matter of incentives. Give people incentives they will bend everything.

The fact that you can bet on a country attacking another is a tragedy.

Re: We haven't seen the worst of what gambling and prediction markets will do

#688

Post by bit-anarchist »

singleshot_ wrote: post #683
bit-anarchist wrote: post #644

Earlier quoted context omitted.

And the naysayers would be right. They come from two approaches: - Property rights: bettors are waging using their own property at their own direct risk. To prohitbit such a thing is to violate their property rights, plain and simple; - Information aggregation: prediction markets originally appeared to help make informed decisions about an event by proof-of-stake. If I'm not mistaken, this idea was originally develop…

Gambling -> bad gamblers lose -> bankruptcy -> creditors eat losses Technically, a lot of gamblers are gambling someone else’s money, they just havens lost enough yet for it to matter. If you want to bring back debtors prison I guess I’d be fine with legalized gambling. If I’m stuck holding the coupon, I’ll pass.

I feel like we are skipping a lot implicit things that shouldn't be left implicit. How are you paying for the bad gamblers' losses? Are you deliberately lending to gamblers without due check? Probably not, that would be very imprudent.

If you aren't the creditor, then I suggest that you make it explicit how you are losing wealth with this. Good chance the issue might be somewhere along the way.

Re: We haven't seen the worst of what gambling and prediction markets will do

#689

Post by bit-anarchist »

epolanski wrote: post #687
bit-anarchist wrote: post #676

Earlier quoted context omitted.

I suggest that you think rationally about what you just said. Why wound anyone open a bet on "rando's house will be set on fire"? Why would they bet on "yes"? You can't present a generic case such as that without going into details about motivations and actual incentives. Those way worse events also have a lot of extra political motivations behind it. If someone starts a war with the sole intention of winning a bet,…

Ay, didn't see your nickname, and your other posts. Thanks for confirming what I said. > And naysayers (which seem to be dropping from the same basket of NFT/crypto cultists) will tell you that this is about probability and information discovery. Also, I ain't conservative, prediction markets, in their actual scope provide no benefits and plenty of wrong incentives. The rest of your post makes no sense. Plenty of wor…

So all you have is name calling?

Regardless, from HN's guidelines:

> Please don't post shallow dismissals

Edit: since posting this, the comment has been edited (at least the version I saw, which ended before the quote). I will write a full response later. For what's worth, I'm grateful for the longer post.

Re: We haven't seen the worst of what gambling and prediction markets will do

#690

Post by cowpig »

mcmcmc wrote: post #672
cowpig wrote: post #415

Earlier quoted context omitted.

this kind of cynicism is malignant

See I would say the malignant part is the systems and people in power who enable and profit from corruption.

The statement that "this is how it works, it's completely corrupt" is what enables the corruption.

It is only through the collective demand that systems serve us that they can be aligned.

If you believe that the system is corrupt then your decisionmaking function will conclude that taking action to demand systems serve you is useless.

But it's only useless if we collectively believe it is useless.

This is what I mean when I say that cynicism is malignant. The more people believe it, the more true it is.

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