Fair enough, that part is worded more strongly than I can really justify. I’d definitely still say it’s quite possible that they are correct, and I still wouldn’t think you can easily show them to be wrong by EMH-style reasoning.
I think one way of putting this is, given that a successful prediction on PredictIt only pays for a few hours of work and the 538 team presumably has at least some full-time people, the 538 team has probably spent more money investigating these questions than the entire PredictIt market combined.
(However, the incentives are different—a PredictIt player has an incentive to be right but 538′s incentive is to tell a story that people who like reading about political statistics will find plausible and interesting)
I think one way of putting this is, given that a successful prediction on PredictIt only pays for a few hours of work
This is extremely far off! I believe on the order of 10-100 people on PredictIt make over $100k/yr, and if you’re already interested in politics sitting around betting is a much easier & enjoyable way to spend an hour than most similarly paid work. (for reference I’ve made around $30k in the last 5 months while ostensibly being a full time student)
Can you clarify how this is possible when the article claims you can only make $100-200 per bet even if you have perfect certainty? Do you just make tons of max value bets? I’m not sure how this site works except for what’s described in the article.
a lot of the costs in the article are on net profits rather than gross profits (eg. taxes, withdrawal fees, risk of PI going under). I didn’t include taxes or withdrawal fees in that figure, but it doesn’t change the order of magnitude (and ofc it’s not clear yet what average tax rate I’ll pay this year)
you can make far more on a contract by trading on swings in addition to waiting for the final outcome (e.g. buy “Yes” at 20c, sell at 80c, then buy “No” at 20c and sell it at 80c).
There’s a large number of contracts to trade on for a single important event (e.g. to bet on Trump winning, you can bet $850 that Trump will win the presidency, $850 that a Republican will win the presidency, $850 that a Democrat will not win the presidency, $850 that Biden will not win the presidency, $850 that the next VP will be a man, and so on). They’re usually not identical, but correlated strongly enough that you can get a lot of exposure to the event. There’s also bracketed markets on e.g. the margin of victory in an election, where each bracket (e.g. Dems win by 0-1%) is a separate contract. A single MoV market might have 10 contracts, so you can bet thousands on it (and they tend to be volatile, so you can easily have 5 figure total turnover).
Overall, PI seems to be a bizzare violation of EMH where you can extract large amounts of money for relatively little time/low skill
Fair enough, that part is worded more strongly than I can really justify. I’d definitely still say it’s quite possible that they are correct, and I still wouldn’t think you can easily show them to be wrong by EMH-style reasoning.
I think one way of putting this is, given that a successful prediction on PredictIt only pays for a few hours of work and the 538 team presumably has at least some full-time people, the 538 team has probably spent more money investigating these questions than the entire PredictIt market combined.
(However, the incentives are different—a PredictIt player has an incentive to be right but 538′s incentive is to tell a story that people who like reading about political statistics will find plausible and interesting)
This is extremely far off! I believe on the order of 10-100 people on PredictIt make over $100k/yr, and if you’re already interested in politics sitting around betting is a much easier & enjoyable way to spend an hour than most similarly paid work. (for reference I’ve made around $30k in the last 5 months while ostensibly being a full time student)
Can you clarify how this is possible when the article claims you can only make $100-200 per bet even if you have perfect certainty? Do you just make tons of max value bets? I’m not sure how this site works except for what’s described in the article.
a lot of the costs in the article are on net profits rather than gross profits (eg. taxes, withdrawal fees, risk of PI going under). I didn’t include taxes or withdrawal fees in that figure, but it doesn’t change the order of magnitude (and ofc it’s not clear yet what average tax rate I’ll pay this year)
you can make far more on a contract by trading on swings in addition to waiting for the final outcome (e.g. buy “Yes” at 20c, sell at 80c, then buy “No” at 20c and sell it at 80c).
There’s a large number of contracts to trade on for a single important event (e.g. to bet on Trump winning, you can bet $850 that Trump will win the presidency, $850 that a Republican will win the presidency, $850 that a Democrat will not win the presidency, $850 that Biden will not win the presidency, $850 that the next VP will be a man, and so on). They’re usually not identical, but correlated strongly enough that you can get a lot of exposure to the event. There’s also bracketed markets on e.g. the margin of victory in an election, where each bracket (e.g. Dems win by 0-1%) is a separate contract. A single MoV market might have 10 contracts, so you can bet thousands on it (and they tend to be volatile, so you can easily have 5 figure total turnover).
Overall, PI seems to be a bizzare violation of EMH where you can extract large amounts of money for relatively little time/low skill