I’d further submit—and I’d be willing to bet on this—that within a short period of creating a large incentive for catastrophe, wicked people will do something horrible to win a bet.
This is trivial to do now: buy oil futures and short oil companies, and blow up a pipeline. Oil-related contracts are notoriously volatile (amplifying gains) and such an attack would make a real difference. Yet despite John Robb’s predictions that ‘terrorist entrepreneurs’ would fund their organizations this way, we have yet to see this.
But we do see behavior like this—not via spectacular attacks in the developed world, which would be extremely high risk, but via much more sophisticated, lower risk methods. Moving paper is much easier (and higher-reward) than violent crime. Spectacular attacks on oil facilities and assassinations of regulatory officials do occur, but they’re usually in the developing world, much farther from cameras, and they’re usually conducted by people who don’t have slicker methods at hand.
And those are in capital markets, where people can make a profit without ever beating the average. Betting markets don’t work that way. We always see behavior like this in betting markets. Competitors threatened or hurt or drugged, refs paid off or intimidated, bad information leaked to the public. Why would a betting market concerned with the political future look different than a betting market concerned with jai-alai?
But we do see behavior like this—not via spectacular attacks in the developed world, which would be extremely high risk, but via much more sophisticated, lower risk methods.
So you’re just claiming that ‘all white-collar crime’ proves your thesis? But that defeats your worries: we seem to be perfectly able to tolerate existing levels of financial market corruption and collusion, and no one seems to seriously think that we would be better off shutting down the stock market and all other financial markets, not using them at all, which is the equivalent of ‘not using political prediction markets at all’.
Why would a betting market concerned with the political future look different than a betting market concerned with jai-alai?
Why does a political market look more like a jai-alai betting market than a wheat or pork bellies betting market?
Why does a political market look more like a jai-alai betting market than a wheat or pork bellies betting market?
One reason stock markets work as well as they do, and bond markets, and commodities markets, and all other financial markets, is that market participants have access to tremendous amounts of information about what they’re investing in. Bets about singular events decades away are as far from pork bellies as you can get. Another reason they work as well as they do is that somebody does own something, whether’s that’s debt or insurance or agricultural futures or actual timber land. Another reason is that it’s generally possible to make money without beating the other guy. You don’t have to be risk prone to invest. These are features of financial markets that are not present in pure gambling markets.
Bets about singular events decades away are as far from pork bellies as you can get.
I don’t see why that is. Political events are not tuned for maximal randomness, they are the results of many real-world trends and forces. Is a bet on China’s GDP 10 years from now really ‘as far from pork bellies as you can get’? There seems to be to be a vast wealth of theories and data one could, and people do, apply to such a question to do better than a coinflip. Are Hillary Clinton’s prospects for winning the next presidential election really as fundamentally unpredictable now as the winners of the next Superbowl or Superball? I don’t think it is.
Another reason they work as well as they do is that somebody does own something, whether’s that’s debt or insurance or agricultural futures or actual timber land.
You do own something at the end of it: a promise to pay from the losing party. This is as much as you own if you buy a bond or T-bill or mortgage, and the fact that you can’t hold a bond the way you can hold a pork belly doesn’t seem to stop people.
Another reason is that it’s generally possible to make money without beating the other guy.
Subsidized prediction markets are also banned. There are reasons to use a PM even with a zero-sum payout, such as hedging or entertainment. And in practice, despite the zero-sum nature, existing prediction markets like Intrade did have users.
This is trivial to do now: buy oil futures and short oil companies, and blow up a pipeline. Oil-related contracts are notoriously volatile (amplifying gains) and such an attack would make a real difference. Yet despite John Robb’s predictions that ‘terrorist entrepreneurs’ would fund their organizations this way, we have yet to see this.
But we do see behavior like this—not via spectacular attacks in the developed world, which would be extremely high risk, but via much more sophisticated, lower risk methods. Moving paper is much easier (and higher-reward) than violent crime. Spectacular attacks on oil facilities and assassinations of regulatory officials do occur, but they’re usually in the developing world, much farther from cameras, and they’re usually conducted by people who don’t have slicker methods at hand.
And those are in capital markets, where people can make a profit without ever beating the average. Betting markets don’t work that way. We always see behavior like this in betting markets. Competitors threatened or hurt or drugged, refs paid off or intimidated, bad information leaked to the public. Why would a betting market concerned with the political future look different than a betting market concerned with jai-alai?
So you’re just claiming that ‘all white-collar crime’ proves your thesis? But that defeats your worries: we seem to be perfectly able to tolerate existing levels of financial market corruption and collusion, and no one seems to seriously think that we would be better off shutting down the stock market and all other financial markets, not using them at all, which is the equivalent of ‘not using political prediction markets at all’.
Why does a political market look more like a jai-alai betting market than a wheat or pork bellies betting market?
One reason stock markets work as well as they do, and bond markets, and commodities markets, and all other financial markets, is that market participants have access to tremendous amounts of information about what they’re investing in. Bets about singular events decades away are as far from pork bellies as you can get. Another reason they work as well as they do is that somebody does own something, whether’s that’s debt or insurance or agricultural futures or actual timber land. Another reason is that it’s generally possible to make money without beating the other guy. You don’t have to be risk prone to invest. These are features of financial markets that are not present in pure gambling markets.
I don’t see why that is. Political events are not tuned for maximal randomness, they are the results of many real-world trends and forces. Is a bet on China’s GDP 10 years from now really ‘as far from pork bellies as you can get’? There seems to be to be a vast wealth of theories and data one could, and people do, apply to such a question to do better than a coinflip. Are Hillary Clinton’s prospects for winning the next presidential election really as fundamentally unpredictable now as the winners of the next Superbowl or Superball? I don’t think it is.
You do own something at the end of it: a promise to pay from the losing party. This is as much as you own if you buy a bond or T-bill or mortgage, and the fact that you can’t hold a bond the way you can hold a pork belly doesn’t seem to stop people.
Subsidized prediction markets are also banned. There are reasons to use a PM even with a zero-sum payout, such as hedging or entertainment. And in practice, despite the zero-sum nature, existing prediction markets like Intrade did have users.