Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

papers.ssrn.com

Post reply on HN
Print view View original

91–100 of 167 posts

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

#91

Post by tencentshill »

solarkraft wrote: post #37
fantasizr wrote: post #24

Earlier quoted context omitted.

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.

This is (possibly what you’re thinking of) a requirement in the EU for CFD trading providers. Providers have to (somewhat prominently) state in all of their ads what percentage of traders loses money using the product.

>99% CHANCE OF LOSS

Yeah but I'm not a sucker like those other 99 guys!

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

#92

Post by pstuart »

newfriend wrote: post #77
pstuart wrote: post #62

Earlier quoted context omitted.

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…

You could go do A right now at a local level. You don't though, because you don't actually want to live that way. It reeks of virtue signaling despite your protest.

> You could go do A right now at a local level. You don't though, because you don't actually want to live that way.

"A" by its very nature is a "group effort". I could definitely be a better citizen and volunteer more and donate to causes, but that is a drop in the ocean.

And I pretty much do live that way myself. I have a modest home that I still have a mortgage on and live pretty simply. I drive a refurb'd EV, dress like slacker, and seek community and connection over flashy toys. I admit that when I walk through the first class section to my seat in coach I am not without envy.

> It reeks of virtue signaling despite your protest

The test in my mind is the cost of B, of living in that kind of world. The fact that you only see virtue signaling in my words says more about you than it does me.

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

#93

Post by neffy »

dheera wrote: post #89
FabHK wrote: post #71

Earlier quoted context omitted.

The stock market is not in the least zero sum. That's just a fundamental misunderstanding. There's dividends, capital allocation, etc.

There is only so much real money in the world, and that is determined by the Treasuries and Feds of the world. There are only so many dollars that were ever created, so many Japanese yen that were ever created, and so many Turkish lira that were ever created. The stock market is a wealth redistribution mechanism, not a money printer. Market caps going up are not equal to money being created. It's not like the shareho…

Although the stock market isn´t in itself, it benefits from the second order effects of continuous money supply expansion, and long term processes progressively concentrating money into the financial system.

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

#94

Post by nonethewiser »

amelius wrote: post #73
nonethewiser wrote: post #66

Earlier quoted context omitted.

>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.

Why? You want to earn exponentially more than other people the harder you work? Instead of just linear?

Let me be more specific. Communism constitutes one way to combat the power law via law. Not all forms of law combatting power law are communism.

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

#95

Post by amelius »

achenet wrote: post #90
amelius wrote: post #70

Earlier quoted context omitted.

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.

> power laws basically spoil it because it gives a hard worker an exponential advantage s/hard worker/person with more capital/ I can make 500 euros from a day of consulting as a software engineer. That's a typical day, working remotely, 9AM to 5PM, with a nice long lunch break. Minimum wage in Bangladesh is around $133 per month. Many workers in the Bangladesh garment industry work 12 hour days. I look at what they…

Just adding a note that making things is what people do naturally, and is what makes us human. People often say that without monetary incentives nothing would be made, but you just have to look at open source to know that that is just not true. (And yes, people make some money in open source sometimes, but you certainly won't find any filthy rich people there.)

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

#96

Post by locallost »

vcf wrote: post #23
locallost wrote: post #20

Earlier quoted context omitted.

I don't think that's surprising because the alternative would be that some people are able to predict the future. Whatever strategy one might figure out that works is long term destined to fail, as other people start using them. The only real way to make money there is by providing liquidity since it's a zero sum game. For the stock market this is not true because it's not zero sum, it grows over time.

Yes, but the alternative (that some people are very good at forecasting) is also plausible. It's also useful to have a good prediction model and timely data sources when providing liquidity. We also find that some of the "biggest losers" also provide liquidity; they just aren't as good at it.

I don't know. Buffett had a good example of, if you organized a national coin flipping contest in the US, you would have people that won 25+ coin tosses in a row. Are these people good at calling coin tosses or is it just chance? You cannot reliably and long term predict if Bitcoin will go up or down within 5 minutes, or something similar. You can cheat maybe somehow, but that's not within the rules of the game.

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

#97

Post by locallost »

tsimionescu wrote: post #57
locallost wrote: post #20

Earlier quoted context omitted.

I don't think that's surprising because the alternative would be that some people are able to predict the future. Whatever strategy one might figure out that works is long term destined to fail, as other people start using them. The only real way to make money there is by providing liquidity since it's a zero sum game. For the stock market this is not true because it's not zero sum, it grows over time.

There are some bets on prediction markets where the future is either already known or in the control of people who may be participating in the market. For example, when people bet on how long the next presidential briefing will be, it doesn't take a prophet to predict this, anyone who organizes said briefing can control it (at least with a very high probability). So, the question becomes "what is the preponderence of…

This still doesn't mean they are good at it. For them it's like flipping a coin with two identical sides. It's just cheating.

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

#98

Post by aaron695 »

pjc50 wrote: post #44
Retr0id wrote: post #28

Earlier quoted context omitted.

Not sure why you were downvoted/flagged, because you're right. It is also quite an insightful comment worthy of discussion so I'm a little conflicted.

It looks completely fine and plausible to me. Which is worrying.

[dead]

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

#99

Post by vcf »

locallost wrote: post #96
vcf wrote: post #23

Earlier quoted context omitted.

Yes, but the alternative (that some people are very good at forecasting) is also plausible. It's also useful to have a good prediction model and timely data sources when providing liquidity. We also find that some of the "biggest losers" also provide liquidity; they just aren't as good at it.

I don't know. Buffett had a good example of, if you organized a national coin flipping contest in the US, you would have people that won 25+ coin tosses in a row. Are these people good at calling coin tosses or is it just chance? You cannot reliably and long term predict if Bitcoin will go up or down within 5 minutes, or something similar. You can cheat maybe somehow, but that's not within the rules of the game.

That's true, but you can invest in your infrastructure and data sources to be faster than most traders, which allows you to provide liquidity with a smaller spread (and snipe the slower traders that try to provide liquidity)
Post reply on HN