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The microstructure of wealth transfer in prediction markets

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Re: The microstructure of wealth transfer in prediction markets

#81

Post by anon84873628 »

LeifCarrotson wrote: post #47
renewiltord wrote: post #22

Earlier quoted context omitted.

The Polymarket twitter accounts are massive ragebaiters. This is sports betting with some two minutes hate added in. I have to say I was this huge fan of the idea and I didn’t anticipate it would happen like this.

I have occasionally tried checking Polymarket and Kalshi to get an idea of the general political/cultural/technological consensus on various issues that are difficult to research otherwise, eg. "what are the chances that the Senate changes hands in the 2026 midterms?" People have thought about it enough to wager a million dollars and the consensus is at about 1/3. I have this abstract prediction market in my head, ea…

Election polling, analysis, and prediction is a mature industry with plenty of reliable commentators who can help answer your question. Here is just one example:

https://www.cookpolitical.com/analysis/senate

Portrayal to the contrary is mostly due to non-experts pumping their own ego, or deliberate media spin.

Re: The microstructure of wealth transfer in prediction markets

#82

Post by monero-xmr »

JumpCrisscross wrote: post #39
bs7280 wrote: post #33

I mentioned this on a different post - the biggest problem with prediction markets is not the gambling or dumb people losing money. Its the fact that it gives very powerful people a vehicle to make lobsided bets on outcomes they control. A small example of this would be NFL / NBA Refs fixing playoff games with a bad call or two. This actually happened 20 years ago, an NBA ref went to prison over being bribed just $20…

> it gives very powerful people a vehicle to make lobsided bets on outcomes they control I'm sceptical that prediction markets uniquely enable this. Like, if you want to bet on U.S. airstrikes in the short term, you could always buy oil options (or short exposed companies). If you're in for the long term, you're buying something that benefits from cheaper gas, e.g. an additives company.

You can also just... not place bets on completely bizarre prediction markets like "how many times this person says this word". The market can sort it out, etc.

Re: The microstructure of wealth transfer in prediction markets

#83

Post by nostromo »

Buttons840 wrote: post #38
bs7280 wrote: post #33

I mentioned this on a different post - the biggest problem with prediction markets is not the gambling or dumb people losing money. Its the fact that it gives very powerful people a vehicle to make lobsided bets on outcomes they control. A small example of this would be NFL / NBA Refs fixing playoff games with a bad call or two. This actually happened 20 years ago, an NBA ref went to prison over being bribed just $20…

It's a national security issue too. Somebody poor grunt who chose to earn a living by laboring (which has proven to be much less effective than being born with money) will be putting fuel in the bombers and thinking "I could just make an anonymous bet..." It's a national security issue. We saw this with the Venezuela attack. A flurry of trading and someone made $400,000 for placing a bet mere hours before the "surpri…

That person is reportedly in jail and facing serious time.

https://finance.yahoo.com/news/trump-jails-venezuela-leaker-...

Anyone with a security clearance making bets like this is not a smart person.

Re: The microstructure of wealth transfer in prediction markets

#84

Post by czhu12 »

I have no background in financial markets at all, but it strikes me that in markets like this, the "house" should be insiders right? The Maduro capture had an insider profit something like 400k. How would one go about understanding how that impact efficient markets?

Could you use inefficient markets as a predictor of great volumes of insider trading?

Re: The microstructure of wealth transfer in prediction markets

#85

Post by teknopaul »

nostromo wrote: post #83
Buttons840 wrote: post #38

Earlier quoted context omitted.

It's a national security issue too. Somebody poor grunt who chose to earn a living by laboring (which has proven to be much less effective than being born with money) will be putting fuel in the bombers and thinking "I could just make an anonymous bet..." It's a national security issue. We saw this with the Venezuela attack. A flurry of trading and someone made $400,000 for placing a bet mere hours before the "surpri…

That person is reportedly in jail and facing serious time. https://finance.yahoo.com/news/trump-jails-venezuela-leaker-... Anyone with a security clearance making bets like this is not a smart person.

Stats on politicians trading habits, indicates insider trading like this is standard practice in the USofA.

No beleives MAGA nuts are trading experts.

Re: The microstructure of wealth transfer in prediction markets

#86

Post by mlinhares »

mhb wrote: post #78
Buttons840 wrote: post #38

Earlier quoted context omitted.

It's a national security issue too. Somebody poor grunt who chose to earn a living by laboring (which has proven to be much less effective than being born with money) will be putting fuel in the bombers and thinking "I could just make an anonymous bet..." It's a national security issue. We saw this with the Venezuela attack. A flurry of trading and someone made $400,000 for placing a bet mere hours before the "surpri…

Wouldn't the counterargument to this be that if the poor grunt is willing to betray his country for money in the prediction market, he would also be willing to take money from enemy x to do the same thing? With the prediction market, there is a financial incentive for people on the opposite side of the bet being motivated to uncover the malfeasance.

Nobody is going to uncover anything on bets when they're done an hour before the event happens. This isn't the stock market and trying to connect it to what happens on the stock market makes no sense.

Re: The microstructure of wealth transfer in prediction markets

#87

Post by [deleted] »

tptacek wrote: post #46
bs7280 wrote: post #33

I mentioned this on a different post - the biggest problem with prediction markets is not the gambling or dumb people losing money. Its the fact that it gives very powerful people a vehicle to make lobsided bets on outcomes they control. A small example of this would be NFL / NBA Refs fixing playoff games with a bad call or two. This actually happened 20 years ago, an NBA ref went to prison over being bribed just $20…

This gets into a philosophical point about what a prediction market actually is. If it's a device for anonymously aggregating fragmented group information into a coherent accurate prediction, the lopsided bets are a feature; the only point of the market is the price signal, and the lopsided bets true up the price. But most of us understand that prediction markets aren't that, no matter what Robin Hansen said when he…

[deleted]

Re: The microstructure of wealth transfer in prediction markets

#88

Post by bs7280 »

TZubiri wrote: post #69
bs7280 wrote: post #33

I mentioned this on a different post - the biggest problem with prediction markets is not the gambling or dumb people losing money. Its the fact that it gives very powerful people a vehicle to make lobsided bets on outcomes they control. A small example of this would be NFL / NBA Refs fixing playoff games with a bad call or two. This actually happened 20 years ago, an NBA ref went to prison over being bribed just $20…

I think the war ones are the only real concern. In the context of legislating prediction markets or not, sports is not a concern at all. Whether it's a net positive or negative for important shit like war and corruption, we'll see, but if it helps in the important stuff, but damages sports, sorry bud.

First - I can not comprehend how you could possibly have a charitable interpretation on the war point and how it might have a net positive. I'm not trying to be condescending or anything, I would like to hear a single positive for being able to make BTC bets on killing people.

Second - even if you are not one of the millions of Americans that give a shit about sports, there is still a massive fraud implications just by the existence of crypto prediction markets. All it takes is one bad call to changed the outcome of game. The Superbowl last year had over $1 billion wagered on it.

Re: The microstructure of wealth transfer in prediction markets

#89

Post by JumpCrisscross »

bs7280 wrote: post #71
JumpCrisscross wrote: post #39

Earlier quoted context omitted.

> it gives very powerful people a vehicle to make lobsided bets on outcomes they control I'm sceptical that prediction markets uniquely enable this. Like, if you want to bet on U.S. airstrikes in the short term, you could always buy oil options (or short exposed companies). If you're in for the long term, you're buying something that benefits from cheaper gas, e.g. an additives company.

You are not wrong, and I should clarify I also have a big problem with the current state of legal insider trading of elected officials, but this polymarket problem is much more extreme. You can get a guaranteed 100-1 payout by blowing up some random people on the other side of the planet. Way worse than making even 2-5x on a leveraged futures bet with insider info. In that example, the victim is usually just other ri…

If we want to go turtles all the way down, we could create a market to predict trading by decision makers and thus incentivize leaks from the betting markets.

Re: The microstructure of wealth transfer in prediction markets

#90

Post by socialcommenter »

wyager wrote: post #73
bs7280 wrote: post #33

I mentioned this on a different post - the biggest problem with prediction markets is not the gambling or dumb people losing money. Its the fact that it gives very powerful people a vehicle to make lobsided bets on outcomes they control. A small example of this would be NFL / NBA Refs fixing playoff games with a bad call or two. This actually happened 20 years ago, an NBA ref went to prison over being bribed just $20…

> Its the fact that it gives very powerful people a vehicle to make lobsided bets on outcomes they control. OK, and? The market is just paying them to make information about their decisions public.

Parent comment has a strong implication that the bets will impact their decisions, and invariably for the worse.

If "Politician XYZ takes the day off and sits on the couch" were paying 100-1 odds, it wouldn't be such a big drama (although, again, the existence of the bet would still impact their behaviour)

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