Any particular innovation is unlikely to transform society, and any particular story for how the future will turn out a particular way is unlikely to come to pass.
True.
there have to be “suckers at the table”
There are plenty of suckers at the table in the realm of securities trading.
why are those people spending money on your prediction market rather than a lottery or something?
Because finance bros and tech bros know that Lotteries Are For Poor People, while Prediction Markets, much like day trading crypto, are the kind of thing that sigma males like them use to get rich at the expense of irrational suckers (who totally aren’t other guys exactly like them). If I recall correctly, high frequency trading is almost entirely zero-sum, and there’s plenty of energy behind it anyway.
it takes a lot of time for the money to go from bad forecasters to good ones.
the losers have incentives to lobby against prediction markets. Anti-gambling laws didn’t write themselves.
The same criticisms apply to regular securities trading. To be fair, there are plenty of losers who hate securities trading, and wish it was illegal.
So what if a politician’s policy turns out badly, and the prediction market predicted that outcome at 90%? The politician will ignore the forecast unless forced to confront it.
This is true. However, voters don’t choose policies directly, only their representatives. If the market expectation of a candidate’s overall performance is upstream of voting patterns, then those candidates are forced to optimize for those expectations.
Also, prediction markets will inevitably get caught in partisan crossfires.
Yes, they will.
if the markets predict bad outcomes for their pet policies, they’ll suddenly accuse the markets of bias or manipulation or favoring the other side.
The cool thing about prediction markets is that if you disagree with them, you can just bet against them and win money. Put up or shut up.
The cool thing about prediction markets is that if you disagree with them, you can just bet against them and win money. Put up or shut up.
Suppose, there is a prediction market for a question like:
“If Alice is elected president, will GDP grow more than 20% by the end of the next 4 years?”
Current bets are 10 to 1 against Alice succeeding if elected. I strongly disagree, so I would like to bet $5000 on Alice and win a lot of money. Alice does not end up being elected, the prediction market probably being largely responsible for this outcome. So, the outcome is unresolved, I’m angry and frustrated since I was not able to make money, nor got my preferred politician got elected, and I lost some opportunity cost due to those $5000 being committed to this bet for some time. So I vote against prediction markets next time since those are obviously an evil plot to keep Alice from becoming president and fixing things.
Maybe, this can be somehow amended if I could instead bet on the effects of some policy that Alice endorses and I find compelling, and it is possible to test this policy on a smaller scale, and we could allocate some money from this presumably large betting pool for actually testing it, and we could somehow guarantee that those who bet lots of money won’t be able to influence this test much. There are a lot of “ifs” here, and this seems to require way more than just legalized prediction markets. I don’t immediately see how legalizing prediction markets necessarily leads to incentives to legalize and make it possible to easily resolve something like that.
I lost some opportunity cost due to those $5000 being committed to this bet for some time.
I expect future iterations of prediction market platforms to allow your money to accrue interest over the course of longer-term bets.
So I vote against prediction markets next time since those are obviously an evil plot to keep Alice from becoming president.
You don’t have to convince the whole country. Not even close. As long as you get New Hampshire to legalize prediction markets, New Hampshire can tell the federal government to go fuck itself. Weed is still federally illegal, remember?
True.
There are plenty of suckers at the table in the realm of securities trading.
Because finance bros and tech bros know that Lotteries Are For Poor People, while Prediction Markets, much like day trading crypto, are the kind of thing that sigma males like them use to get rich at the expense of irrational suckers (who totally aren’t other guys exactly like them). If I recall correctly, high frequency trading is almost entirely zero-sum, and there’s plenty of energy behind it anyway.
The same criticisms apply to regular securities trading. To be fair, there are plenty of losers who hate securities trading, and wish it was illegal.
This is true. However, voters don’t choose policies directly, only their representatives. If the market expectation of a candidate’s overall performance is upstream of voting patterns, then those candidates are forced to optimize for those expectations.
Yes, they will.
The cool thing about prediction markets is that if you disagree with them, you can just bet against them and win money. Put up or shut up.
Suppose, there is a prediction market for a question like:
“If Alice is elected president, will GDP grow more than 20% by the end of the next 4 years?”
Current bets are 10 to 1 against Alice succeeding if elected. I strongly disagree, so I would like to bet $5000 on Alice and win a lot of money. Alice does not end up being elected, the prediction market probably being largely responsible for this outcome. So, the outcome is unresolved, I’m angry and frustrated since I was not able to make money, nor got my preferred politician got elected, and I lost some opportunity cost due to those $5000 being committed to this bet for some time. So I vote against prediction markets next time since those are obviously an evil plot to keep Alice from becoming president and fixing things.
Maybe, this can be somehow amended if I could instead bet on the effects of some policy that Alice endorses and I find compelling, and it is possible to test this policy on a smaller scale, and we could allocate some money from this presumably large betting pool for actually testing it, and we could somehow guarantee that those who bet lots of money won’t be able to influence this test much. There are a lot of “ifs” here, and this seems to require way more than just legalized prediction markets. I don’t immediately see how legalizing prediction markets necessarily leads to incentives to legalize and make it possible to easily resolve something like that.
I expect future iterations of prediction market platforms to allow your money to accrue interest over the course of longer-term bets.
You don’t have to convince the whole country. Not even close. As long as you get New Hampshire to legalize prediction markets, New Hampshire can tell the federal government to go fuck itself. Weed is still federally illegal, remember?