[marginalia_nu]

Tangentially related, I have a hunch, but cannot prove, that prediction markets are the driving force behind a lot of the bad information online, since they essentially monetarily incentivize making people misjudge the state of the world.

There's been a huge uptick in this sort of brigade like behavior around current events. First noted it around LK99, that failed room temperature semiconductor in 2023, but it just keeps happening.

Used to be we only saw it around elections and crypto pump and dumps, now it's cropping up in the weirdest places.

[3eb7988a1663]

That seems really high effort. I assume most events are things which are hard to influence, so at best you are hoping to tilt the wager odds into your favor. Which could backfire if you are betting on the wrong outcome.

[lazide]

There have been a number of recent incidents in prediction markets where insiders have directly influenced the outcome after taking the opposite side of the bets.

[pphysch]

There's plenty of "high effort" market information manipulation going on, even before LLMs. Spread (justified, researched) FUD about a company your fund is shorting.

[lofaszvanitt]

How do you misjudge the world based on web articles? If you don't have proper foundations where to source your information from you are already doomed.

[marginalia_nu]

It's generally not articles that are used, but discussion boards and social media. If it seems like everyone agrees on something, it's very easy to get dragged into thinking the idea has merit

[lofaszvanitt]

Now both of those are almost 100% bs.

[digiown]

Interesting theory. I'm inclined to disagree, however. Prediction markets essentially allows people to trade information for money, even the types historically more difficult to trade. There aren't enough people betting on things for deliberate misinformation to become worthwhile, IMO, and most people would stop betting after being in the wrong too often, unlike casinos which always let you win sometimes.

I believe the misinformation is largely by self-interested parties. Politicians as well as influencers trying to push agendas, and the engagement/attention farming for advertising revenue, which are largely indifferent to truth.

[esperent]

I agree that the payoff from prediction markets doesn't seem worth it for this kind of manipulation. Collectively they hold a lot of money but I'm not sure how much individuals or groups are making. That story of someone making half a million recently was an outlier rather than norm, as far as I know.

But, what if prediction markets are just used for information gathering, but the real money is made from market manipulation via prediction markets? I'm sure a lot of investment groups watch prediction markets very carefully, if they can manipulate the predictions, or be manipulated by them, the money to be made is big enough for any level of effort to be believable.

[marginalia_nu]

It's the same as with crypto rug pulls, nobody is going to fall for that several times. Was still money to make in that before everyone and their grandma wisened up.

[digiown]

I don't think prediction markets work well for that. It is a market and you can't really prevent anyone else from benefitting from the same victims, which dilutes your earnings.

[forgetfreeman]

You don't need a perfect oracle to win on prediction markets. All it takes is enough influence to tip % in your favor. Card counting is very effective.

[marginalia_nu]

Yeah, as long as it's reasonably reliable, compound interest also adds up to turn even small ROIs into big wins across multiple investments.

[digiown]

I don't think it would be reliable enough. Small odds in favor of you and large variations (due to small market cap) require you to invest only small amounts based on the Kelly criterion, and I feel like the resources needed to carry out these influence campaigns are much more effectively used for other goals like political maneuvers.

[datsci_est_2015]

> It's the same as with crypto rug pulls, nobody is going to fall for that several times.

Same grift, different mask. NFTs, shitcoins, blockchain startups, AI startups. We continually see that even if it’s not the same mark, there are plenty of fools easily separated from their wallets.

[tylergetsay]

The volumes on the majority of markets are very small

[datsci_est_2015]

Are you downplaying the incentive for bad actors to generate false or misleading information online in order to create a margin for monetary gain?

This, in the same country that has allocated some of the greatest minds of our generation towards tasks like High Frequency Trading under the guise of “price discovery”?

Forgive me if I’m a little less credulous than you.

[wasmainiac]

> semiconductor

Superconductor