You’ve gotten a fair number of disagree-votes thus far, but I think it’s generally correct to say that many (arguably most) prediction markets still currently lack the trading volume necessary to justify confidence that EMH-style arguments mean inefficiencies will be rapidly corrected. To a large extent, it’s fair to say this is due to over-regulation and attempts at outright banning (perhaps the relatively recent 5th Circuit ruling in favor of PredictIt against the Commodities Future Trading Commission is worth looking at as a microcosm of how these legal battles are playing out in today’s day and age).
Nevertheless, the standard theoretical argument that inefficiencies in prediction markets are exploitable and thus lead to a self-correcting mechanism still seems entirely correct, as Garrett Baker points out.
You’ve gotten a fair number of disagree-votes thus far, but I think it’s generally correct to say that many (arguably most) prediction markets still currently lack the trading volume necessary to justify confidence that EMH-style arguments mean inefficiencies will be rapidly corrected. To a large extent, it’s fair to say this is due to over-regulation and attempts at outright banning (perhaps the relatively recent 5th Circuit ruling in favor of PredictIt against the Commodities Future Trading Commission is worth looking at as a microcosm of how these legal battles are playing out in today’s day and age).
Nevertheless, the standard theoretical argument that inefficiencies in prediction markets are exploitable and thus lead to a self-correcting mechanism still seems entirely correct, as Garrett Baker points out.