[throwaway27448]

What is this supposed to imply? You can't reasonably draw any conclusion from betting without understanding who is betting and why.

Well, I suppose you can draw the conclusion that "polymarket customers are interested in this topic"

[c7b]

The Venn diagram of people who have deep understanding of capital markets and people who like betting on stuff will have non-negligible overlap. Read some of the stories about Wall Street, especially from before it was all algorithms. Moreover, evidence of apparent insider trading on Polymarket, specifically for OpenAI, has already been shared on HN. Sounds pretty crazy to me to suggest that those odds can't tell us anything about the true probabilities. What's your reasoning?

[isoprophlex]

"polymarket customers think they have some alpha over other consumers on this topic"

Or even less charitable,

"People susceptible to gambling have been manipulated into spending money on this"

[lelanthran]

> What is this supposed to imply?

Wisdom of the crowd, same as guessing jellybeans in a jar. The exact average is wrong, but it's still pretty damn close because the guesses are likely to follow a normal distribution.

If the hump of the normal distribution of these guesses is around 4% (or whatever) odds on, the actual answer is unlikely to be far from that.

> You can't reasonably draw any conclusion from betting without understanding who is betting and why.

Irrelevant; Polymarket is the reflection of the bettors view. When they place their bets, they don't care which way this goes, they only care to predict the direction correctly.

Unfortunately, it could be a case of the tail wagging the dog - even if the IPO would have been successful without polymarket existing, now that they have a signal from polymarket it is likely to be used as one of the weightings when they determine the correct time to IPO.

[sph]

> Wisdom of the crowd

I checked Polymarket towards the end of February for the odds of US bombing Iran and they were vanishingly low. IIRC most bets were aiming for summer 2026. YMMV.

[gosub100]

There's a prisoners execution paradox here. If PM said there's a 95% chance, then Iran knows that too, and can prepare. Making them a worse target.

[WJW]

Wisdom of the crowd has some fatal flaws that are especially important when it comes to things like IPOs.

- Most significantly, most scientific research focuses on things that are actually amenable to guesses with a normal distribution, like "amount of jellybeans in a jar" or "length of the border between country A and country B". An IPO is a binary choice where it either goes public or not. There is no correct value to converge to.

- It has been shown that as bettors gain more information about the bets of others, predictions lose accuracy and bettors converge to a consensus value instead. It seems to me that online prediction markets would be extremely prone to this as the bets of other people are all there in the market price.

- Prediction markets generally become more accurate as the diversity of the bettor pool grows. The users of polymarket and Kalshi heavily skew towards young men from certain socioeconomic groups, who may be biased towards one or the other outcome.

In the case of an OpenAI IPO, it seems likely multiple of these would converge as people start to fall prey to groupthink because "everybody knows that they'll IPO soon" in their local media bubble.

[some_random]

The question isn't "will they IPO" the question is "when will they IPO" which is not a binary question. The rest of your point about Polymarket users now being mostly degenerate gamblers is true though.

[smcin]

The relative timing, valuations (and float sizes) of the expected SpaceX, Anthropic and then OpenAI IPOs would still be highly correlated. Even allowing for moral degeneracy among most of the gamblers on this particular Polymarket market.

[wat10000]

It’s two binary questions about whether they will IPO by specific dates. It’s not obvious to me that this maps to a more granular “when will they IPO?” question.

[sph]

> It has been shown that as bettors gain more information about the bets of others, predictions lose accuracy and bettors converge to a consensus value instead.

This makes intuitive sense to me; is there a name for this phenomenon?

A prediction platform’s biggest value is publicising information from possible insiders, who at some point will work harder to maintain secrecy not to lose their informational advantage. So all that remains are people gambling on public info.

That said, greed from insiders looking to make a quick buck will always skew the price towards ‘truth’

[lelanthran]

> An IPO is a binary choice where it either goes public or not. There is no correct value to converge to.

Of course there is - they are betting on the "when".

> It has been shown that as bettors gain more information about the bets of others, predictions lose accuracy and bettors converge to a consensus value instead.

I dunno how to reply to this - that is exactly my point, but it appears (to me, anyway) that you are saying this in disagreement?

Let me clarify - my point is that wisdom of the crowd converges on to a value that is quite near the actual value.

> In the case of an OpenAI IPO, it seems likely multiple of these would converge as people start to fall prey to groupthink because "everybody knows that they'll IPO soon" in their local media bubble.

Sure, if everyone is in the same local media bubble, that once again, that is unlikely, because these are people who don't make money from the result, they make money from correctly predicting it, hence they are exactly the demographic that will seek out more and more information outside of any bubble they may be in.

It's one thing when proponents of $FOO spend time boosting their PoV/wishes/hopes on a forum. It's quite another when they have to put their money where their mouth is: then they are open to new information!

[wat10000]

They’re not betting on when, they’re betting on if with a time limit.

[WJW]

> I dunno how to reply to this - that is exactly my point, but it appears (to me, anyway) that you are saying this in disagreement?

Yes. The research shows that they do (almost) always converge, but that they DON'T always converge to an accurate value. In particular, there can be behavioral biases at work that warp the perception of bettors in one direction or the other. A well documented case of this is when fans of a sports team pile in and bet for their favorite team, causing the price to shift too much towards the more popular team. Exposure to the predictions by other bettors then causes the total market to converge to the biased price. Interestingly enough, people still do this even though this phenomenon is well documented and they have to put their money on the line. People just don't care enough about their $10 bet to do thorough research.

In a similar way, I would not at all be surprised if some people are such fanboys of OpenAI that they start to display cultlike behavior. You can easily find such people online even on this very site. It's not such a weird thing to consider that people at the peak of a hype cycle don't always behave in rational ways, especially when they're just betting $10 when drunk on a Saturday evening.

[jpadkins]

if you can identify where and how prediction markets are wrong, why aren't you applying that and making millions?

> - Prediction markets generally become more accurate as the diversity of the bettor pool grows. The users of polymarket and Kalshi heavily skew towards young men from certain socioeconomic groups, who may be biased towards one or the other outcome.

Citation? If your small population is high IQ, accurate predictors and you diversify to average IQ population, won't the accuracy go down not up?

[fwip]

> why aren't you applying that and making millions?

Knowing that something is a lousy predictor doesn't mean that you have a better one.

[jpadkins]

A lot of predictions are binary. If you know the market is wrong, then you take the other side of the prediction.

[smcin]

That Polymarket traders believe an OpenAI IPO this quarter, or even this year, is unlikely (or else almost all of them are hedging, e.g. long on other AI stocks. Which seems unlikely.)

Anyone who thinks that position is wrong and it's >4% likely has a clear profit opportunity.

[edgyquant]

Not everyone is a degenerate gambler

[some_random]

How many degenerate gamblers do you need before it stops being a useful tool?

[mcintyre1994]

It only has $1m volume, so even that conclusion is a bit of a stretch. By comparison NCAA tournament has $15m, and US confirms aliens this year has $18m.

[lavezzi]

It’s legalised insider trading. So you can always assume at this point that someone who knows will be cashing out.