One thing I don’t see mentioned here is PredictIt’s advertising approach can bias markets. I haven’t done much research into this myself, but a top PredictIt trader mentions in this post that PredictIt advertised on Breitbart during the 2016 election, bringing in lots of money from die-hard Trump supporters: https://politicalpredictionmarkets.com/blog/
Counter-argument: Other prediction markets (that presumably are not mimicking PredictIt’s advertising approach) also had similar odds for the 2020 election that were quite far from 538.
The more salient counter-argument, I think, is that if prediction markets are functioning as advertised then this shouldn’t matter.
If lots of Trump supporters are attracted by advertising to make expressive bets, this should draw smart money like blood draws sharks as informed investors snap up the free money...but this is contingent on smart investors actually being able to profit from this mispricing, which for the reasons in the post they may not be.
One thing I don’t see mentioned here is PredictIt’s advertising approach can bias markets. I haven’t done much research into this myself, but a top PredictIt trader mentions in this post that PredictIt advertised on Breitbart during the 2016 election, bringing in lots of money from die-hard Trump supporters: https://politicalpredictionmarkets.com/blog/
Counter-argument: Other prediction markets (that presumably are not mimicking PredictIt’s advertising approach) also had similar odds for the 2020 election that were quite far from 538.
The more salient counter-argument, I think, is that if prediction markets are functioning as advertised then this shouldn’t matter.
If lots of Trump supporters are attracted by advertising to make expressive bets, this should draw smart money like blood draws sharks as informed investors snap up the free money...but this is contingent on smart investors actually being able to profit from this mispricing, which for the reasons in the post they may not be.