Yeah, that claim was always ludicrous to me too. Wisdom-of-crowds isn’t an unbiased decision making strategy, it’s quite biased. Crowd-wisdom works best as a limiter on the bias of other decision making strategies—this is why democracies use representatives rather than direct votes for most decisions.
And polymarket isn’t even the wisdom of crowds lol. At its greatest possible adoption it’s still the wisdom of internet-connected (mostly) white men with time and money to spend on gambling.
If you believe Polymarket odds are wrong in a systematic way then you are free to make a lot of money out of it. Unlike the stock market, where "Markets can remain irrational longer than you can remain solvent", any such irrationality will become irrelevant at settlement time.
The argument isn’t about whether prediction markets can stay well-calibrated.
The argument is that prediction markets incentivize insider trading and backroom power brokership. The “potential energy” behind surprise upsets is most profitably exploited when the outcome sharply differs from the public calibrated consensus, so these two incentives - calibration vs potential for exploitation - are in fundamental tension. I think this tension undermines the whole purpose of prediction markets IMO.
I don't know, man, looks like we are now literally gambling on whether people die today or tomorrow. This is even worse than underground sports gambling.
Yeah, that claim was always ludicrous to me too. Wisdom-of-crowds isn’t an unbiased decision making strategy, it’s quite biased. Crowd-wisdom works best as a limiter on the bias of other decision making strategies—this is why democracies use representatives rather than direct votes for most decisions.
And polymarket isn’t even the wisdom of crowds lol. At its greatest possible adoption it’s still the wisdom of internet-connected (mostly) white men with time and money to spend on gambling.
If you believe Polymarket odds are wrong in a systematic way then you are free to make a lot of money out of it. Unlike the stock market, where "Markets can remain irrational longer than you can remain solvent", any such irrationality will become irrelevant at settlement time.
The argument isn’t about whether prediction markets can stay well-calibrated.
The argument is that prediction markets incentivize insider trading and backroom power brokership. The “potential energy” behind surprise upsets is most profitably exploited when the outcome sharply differs from the public calibrated consensus, so these two incentives - calibration vs potential for exploitation - are in fundamental tension. I think this tension undermines the whole purpose of prediction markets IMO.
Ugh, the sophistry (or at least self-deceiving arguments) people throw around to defend these markets makes my stomach churn.
"It is difficult to get a prediction-market person to understand something, when their stock-options and IPO depends upon them not understanding it."
-- Cyborg Upton Sinclair
I don't know, man, looks like we are now literally gambling on whether people die today or tomorrow. This is even worse than underground sports gambling.
Reply of the year. I'm not sure if I'm supposed to laugh or cry.
The question isn't whether futarchy isn't perfect, it's whether its better than our existing democracy.
Well, we're discovering some really fascinating and pervasive failure cases of proto-futarchy. Please update your priors.