It seems the pro-Trump Polymarket whale may have had a real edge after all. Wall Street Journal reports (paywalled link, screenshot) that he’s a former professional trader, who commissioned his own polls from a major polling firm using an alternate methodology—the neighbor method, i.e. asking respondents who they expect their neighbors will vote for—he thought would be less biased by preference falsification.
I didn’t bet against him, though I strongly considered it; feeling glad this morning that I didn’t.
I don’t remember anyone proposing “maybe this trader has an edge”, even though incentivising such people to trade is the mechanism by which prediction markets work. Certainly I didn’t, and in retrospect it feels like a failure not to have had ‘the multi-million dollar trader might be smart money’ as a hypothesis at all.
Why do you focus on this particular guy? Tens of thousands of traders were cumulatively betting billions of dollars in this market. All of these traders faced the same incentives.
Note that it is not enough to assume that willingness to bet more money makes a trader worth paying more attention to. You need the stronger assumption that willingness to bet n times more than each of n traders makes the single trader worth paying more attention to than all the other traders combined. I haven’t thought much about this, but the assumption seems false to me.
Because I saw a few posts discussing his trades, vs none for anyone else’s, which in turn is presumably because he moved the market by ten percentage points or so. I’m not arguing that this “should” make him so salient, but given that he was salient I stand by my sense of failure.
Mmh, if there is no reason to take that particular trader seriously, but just the mere fact that his trades were salient, I don’t see why one should experience any sense of failure whatsoever for not having paid more attention to him at the time.
Still, my main point was about the reasons for taking that particular trader seriously, not the sense of failure for not having done so, and it seems like there is no substantive disagreement there.
Knowing now that he had an edge, I feel like his execution strategy was suspect. The Polymarket prices went from 66c during the order back to 57c on the 5 days before the election. He could have extracted a bit more money from the market if he had forecasted the volume correctly and traded against it proportionally.
On one hand, I feel a bit skeptical that some dude outperformed approximately every other pollster and analyst by having a correct inside-view belief about how existing pollster were messing up, especially given that he won’t share the surveys. On the other hand, this sort of result is straightforwardly predicted by Inadequate Equilibria, where an entire industry had the affordance to be arbitrarily deficient in what most people would think was their primary value-add, because they had no incentive to accuracy (skin in the game), and as soon as someone with an edge could make outsized returns on it (via real-money prediction markets), they outperformed all the experts.
On net I think I’m still <50% that he had a correct belief about the size of Trump’s advantage that was justified by the evidence he had available to him, but even being directionally-correct would have been sufficient to get outsized returns a lot of the time, so at that point I’m quibbling with his bet sizing rather than the direction of the bet.
Norvid on Twitter made the apt point that we will need to see the actual private data before we can really judge. Not unusual for lucky people to backrationalize their luck as a sure win.
I can proudly say that though I disparaged the guy in private, I not once put my money where my mouth was, which means outside observers can infer that all along I secretly agreed with his analysis of the situation.
It seems the pro-Trump Polymarket whale may have had a real edge after all. Wall Street Journal reports (paywalled link, screenshot) that he’s a former professional trader, who commissioned his own polls from a major polling firm using an alternate methodology—the neighbor method, i.e. asking respondents who they expect their neighbors will vote for—he thought would be less biased by preference falsification.
I didn’t bet against him, though I strongly considered it; feeling glad this morning that I didn’t.
I don’t remember anyone proposing “maybe this trader has an edge”, even though incentivising such people to trade is the mechanism by which prediction markets work. Certainly I didn’t, and in retrospect it feels like a failure not to have had ‘the multi-million dollar trader might be smart money’ as a hypothesis at all.
Why do you focus on this particular guy? Tens of thousands of traders were cumulatively betting billions of dollars in this market. All of these traders faced the same incentives.
Note that it is not enough to assume that willingness to bet more money makes a trader worth paying more attention to. You need the stronger assumption that willingness to bet n times more than each of n traders makes the single trader worth paying more attention to than all the other traders combined. I haven’t thought much about this, but the assumption seems false to me.
Because I saw a few posts discussing his trades, vs none for anyone else’s, which in turn is presumably because he moved the market by ten percentage points or so. I’m not arguing that this “should” make him so salient, but given that he was salient I stand by my sense of failure.
Mmh, if there is no reason to take that particular trader seriously, but just the mere fact that his trades were salient, I don’t see why one should experience any sense of failure whatsoever for not having paid more attention to him at the time.
Still, my main point was about the reasons for taking that particular trader seriously, not the sense of failure for not having done so, and it seems like there is no substantive disagreement there.
Knowing now that he had an edge, I feel like his execution strategy was suspect. The Polymarket prices went from 66c during the order back to 57c on the 5 days before the election. He could have extracted a bit more money from the market if he had forecasted the volume correctly and traded against it proportionally.
Wow, tough crowd
On one hand, I feel a bit skeptical that some dude outperformed approximately every other pollster and analyst by having a correct inside-view belief about how existing pollster were messing up, especially given that he won’t share the surveys. On the other hand, this sort of result is straightforwardly predicted by Inadequate Equilibria, where an entire industry had the affordance to be arbitrarily deficient in what most people would think was their primary value-add, because they had no incentive to accuracy (skin in the game), and as soon as someone with an edge could make outsized returns on it (via real-money prediction markets), they outperformed all the experts.
On net I think I’m still <50% that he had a correct belief about the size of Trump’s advantage that was justified by the evidence he had available to him, but even being directionally-correct would have been sufficient to get outsized returns a lot of the time, so at that point I’m quibbling with his bet sizing rather than the direction of the bet.
Norvid on Twitter made the apt point that we will need to see the actual private data before we can really judge. Not unusual for lucky people to backrationalize their luck as a sure win.
I can proudly say that though I disparaged the guy in private, I not once put my money where my mouth was, which means outside observers can infer that all along I secretly agreed with his analysis of the situation.
I think it can be both rational to doubt his edge and not trade on it.
Yes. https://www.lesswrong.com/posts/tDkYdyJSqe3DddtK4/alexander-gietelink-oldenziel-s-shortform?commentId=JqDaYkRyw2WSAZLDg