Prediction markets function best when liquidity is high, but they break completely if the liquidity exceeds the price of influencing the outcome. Prediction markets function only in situations where outcomes are expensive to influence.
There are a ton of fun examples of this failing:
Libor
“Chicken Libor”
Every sport, all the time
Option expiries (I don’t have a good single link for this)
There are a ton of fun examples of this failing:
Libor
“Chicken Libor”
Every sport, all the time
Option expiries (I don’t have a good single link for this)