There is a situation in which information markets could be positive sum, though I don’t know how practical it is:
I own a majority stake in company X. Someone has proposed an action A that company X take, I currently think this is worse than the status quo, but I think it’s plausible that with better information I’d change my mind. I set up an exchange of X-shares-conditional-on-A for USD-conditional-on-A and the analogous exchange conditional on not-A, subsidised by some fraction of my X shares using an automatic market maker. If, by the closing date, X-shares-conditional-on-A trade at a sufficient premium to X-shares-conditional-on-not-A, I do A.
In this situation, my actions lose money vs the counterfactual of doing A and not subsidising the market, but compared to the counterfactual of not subsidising the market and not doing A I gain money because the rest of my stock is now worth more. It’s unclear how I do compared to the most realistic counterfactual of “spend $Y researching action A more deeply and act accordingly”.
(note that conditional prediction markets also have incentive issues WRT converging to the correct prices, though I’m not sure how important these are in practice)
There is a situation in which information markets could be positive sum, though I don’t know how practical it is:
I own a majority stake in company X. Someone has proposed an action A that company X take, I currently think this is worse than the status quo, but I think it’s plausible that with better information I’d change my mind. I set up an exchange of X-shares-conditional-on-A for USD-conditional-on-A and the analogous exchange conditional on not-A, subsidised by some fraction of my X shares using an automatic market maker. If, by the closing date, X-shares-conditional-on-A trade at a sufficient premium to X-shares-conditional-on-not-A, I do A.
In this situation, my actions lose money vs the counterfactual of doing A and not subsidising the market, but compared to the counterfactual of not subsidising the market and not doing A I gain money because the rest of my stock is now worth more. It’s unclear how I do compared to the most realistic counterfactual of “spend $Y researching action A more deeply and act accordingly”.
(note that conditional prediction markets also have incentive issues WRT converging to the correct prices, though I’m not sure how important these are in practice)