[qznc]

Insider trading is illegal because the non-insiders would stop trading otherwise.

Prediction markets have some problems but this isn't the biggest one. One can even use it for good. If a company gives its associates stocks but prevents them to sell for some time, this is essentially the same mechanism.

For example, we could make prediction markets about upcoming policy and laws and their impact. Then we can tell the policy makers to bet that their proposed changes actually have the good outcomes they promise.

[logicchains]

> Insider trading is illegal because the non-insiders would stop trading otherwise.

This is completely, demonstrably false; there are no insider trading laws in rel estate, commodities or crypto, but that doesn't stop people buying.

[gruez]

Real estate sort of has insider trading laws, but in the opposite direction. If you know your building has a defect, you have to disclose it to any potential buyers. It's not exactly the same as a ban on insider trading, but it basically prevents the sort of insider trading where you know something bad is going to happen and so you dump the stock. Also there's a technical point: "insider" has a specific meaning (ie. an employee having material non public information). For real estate, commodities or crypto, it basically doesn't exist.

[roenxi]

Not so, I would just buy whatever the insiders are buying a bit later. The argument against insider trading is a bit weak because it seems impossible to enforce effectively and I don't see why anyone would assume insiders are anything but active in the market.

Picking on stocks as an example, there is a background fair market rate that everything should theoretically achieve. Insiders way outperform that - but most people are in the market to target the background rate, not the outlier rate insider traders can achieve.

[tnel77]

My favorite part of insider trading is that it only punishes those who take action. You buy or sell. If you have insider information that prevents you from buying or selling, that’s just fine (at least that is my understanding).

[kcb]

If everyone bought whatever the insiders were buying there would be no one to take the other side.