[daft_pink]

Just want to reiterate that prediction markets are beneficial, because they are the most accurate way to provide us with a dynamic mechanism to predict future outcomes from complicated systems.

As was put forth in James Suroweicki’s the Wisdom of Crowds, prediction markets provide predictions that tend to be more accurate than any expert, team of experts, etc. That doesn’t mean it’s 100% accurate, but it tends to be more accurate than any other mechanism that we have.

The benefit is not that gamblers have a place to gamble, but that society has a way to gauge the risks of different outcomes and plan accordingly.

[Planktonne]

I'm not sure 'have a benefit' maps directly to 'are beneficial'. You also have to consider the downsides, such as people with influence deliberately causing X event to happen (e.g. a war) so that they can profit.

I'm not sure the increased predictability is worth the increased instability.

[daft_pink]

I think this is a sensible argument.

I don't agree with the other commenters about the "insider" trading. I think since the point is to get information more quickly, I don't really care whether it's insider or not, but I do think it's a bad idea for someone to cause certain improbable events by betting on them.

[hebleb]

It certainly benefits insiders that can bet on outcomes they directly control

[scoofy]

>Just want to reiterate that prediction markets are beneficial, because they are the most accurate way to provide us with a dynamic mechanism to predict future outcomes from complicated systems.

I'm sorry, but no, this is just absolutely wrong.

If everyone was making these predictions, in good-faith, then yes it would "provide us with a dynamic mechanism to predict future outcomes from complicated systems." However, when truckloads of money is involved, then insiders actually want to have the markets be weighted incorrectly to maximize gain at exactly the point where vega and theta are minimized... at the very last second possible.

Market reflexivity exists and undermines this entire thesis. People need to stop pretending everyone out there is a nice man like Nate Siver just doing this for fun. As long as insiders exist and are allowed to trade, then they have every incentive to induce misinformation until the very last moment when they can trade against it.