[sterlingcrispin]

Yes exactly.

The bot has zero risk management and I have a strong disclaimer on the github it is essentially a meme.

73% of all polymarkets do resolve to No though.

There's a good dataset on huggingface if you wanted to do some data science

https://huggingface.co/datasets/SII-WANGZJ/Polymarket_data

[some_random]

It doesn't matter if 99% resolve no, if they're priced appropriately betting no on every single one won't make you money.

[jfengel]

If they're appropriately priced, you can't win money at all, unless you have insider knowledge.

[okhobb]

The purpose of prediction markets is to communicate insider knowledge.

[miki123211]

The purpose of any price-based system is to communicate knowledge, not necessarily insider knowledge.

There are actually two theories on insider knowledge. One states that allowing insider trading is beneficial, as it allows prices to better match the underlying reality, the other states that this discourages non-insider trading, which actually makes the prices worse. Stock markets lean heavily towards the second theory, while prediction markets seem to be leaning towards the first.

[TeMPOraL]

Why would encouraging non-insider training be desirable in the first place, other than to create a more high-status form of gambling, with higher spouse acceptance factor than smoke-filled room poker games? People with no inside knowledge[0] are just trading on vibes, how is that useful for the economy?

--

[0] - Or external knowledge, but actual knowledge - thinking of hedge funds stalking CEOs as they fly in private jets, or counting cars in parking lots from satellite photos, to get some probability estimates on factors actually relevant to the performance of a business and possible future events.

[jfengel]

The stock market wasn't designed to be gambling. You're buying a piece of a company. They want people to come so they can raise money for expanding businesses. If insider trading benefits some at the expense of others, people won't come.

Obviously it has come a long way from that, and the markets have become more like gambling. You could probably allow insider trading at this point and the system would continue just fine.

[efromvt]

Hmm yeah it depends on your definition of insider. If you assume all raw information is public-ish, a market can reward those who can synthesize/operate on that knowledge to predict better. (The cars in the lot, etc. there is friction to this discovery; the knowledge can be communicated to others through the market after discovery to profit off the initial cost of discovery). There is symmetric competition to some degree. If you have true non public knowledge (I’m going to say something to tank the stock on this date) then you are purely extracting value from others because you will always win; they will never have that info and the incentive for anyone else to participate in price discovery would go away.

[naniwaduni]

Stocks are a financing mechanism. They're useful for the economy independent of the price discovery aspect in the much the same ways that lending is, except that instead of receiving an obligation of future payment you're compensated on vibes.

[dasudasu]

Non-insider trading is liquidity. That’s why people pay for retail trading volume (payment for order flow). Not because of nefarious reasons. Just because it represents liquidity. With no liquidity it’s impossible to enter or exit trades efficiently.

[_cadp]

>the other states that this discourages non-insider trading, which actually makes the prices worse

This theory is fundamentally not credible, the other side of any trade you make on the stock market is essentially always going to be vastly more sophisticated than you. Insider trading makes zero difference to the end-user.

The credible argument against insider trading is that it's a form of theft. You are making trades based on information which does not belong to you, and which you have an obvious duty to protect. You are essentially stealing from the people you work for.

[Muromec]

I would say corruption and not theft

[jfengel]

Stock markets also want to keep executives honest. When the insider can affect the outcome, it creates bad motives. They don't want the CEO selling a bunch of puts, then deliberately tanking the stock. Not for the other bettors, but because the institution is about business.

Prediction markets are doing a bit of that. Some won't take bets on an assassination.

[slashdev]

You can bet on assassination. There are polymarket prediction markets for leaders of many countries where you can bet on if they will cease to be the leader by X date, for any reason.

If they get assassinated, those markets will resolve to yes. At least the rules don't specifically exclude that.

[mapt]

In the hypothetical Anarcho-Capitalist finance world, the remedy for a breach of fiduciary duty (corporate graft / insider tips) looks more like Jim Bell than Chuck Rhoades.

[khimaros]

https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...

[eru]

Compare and contrast https://www.astralcodexten.com/p/come-on-obviously-the-purpo...

[khimaros]

thank you for sharing. i typically like his writing but didn't find this one terribly insightful.

however, from his follow-up post https://www.astralcodexten.com/p/highlights-from-the-comment...:

> When people insist on the confusing and inappropriately-strong version, I start to suspect that the confusingness is a feature, letting them smuggle in connotations that people would otherwise correctly challenge.

i find this comical because it reads like a slightly-differently-worded POSIWID argument :)

[Orygin]

Why does the page have a non-removable blue filter? Feels like a popup shadow that doesn't go away...

[viccis]

>The purpose of the Ukrainian military is to get stuck in a years-long stalemate with Russia.

>These are obviously false.

The purpose of the Ukrainian military is to exhaust the Russian army's materiel and test out our weapons. "Years-long stalemate with Russia? Yes, please." -the US. Seems like an overwhelmingly common Scott Alexander L.

[vasco]

Is the purpose of replying to Wikipedia with random substack drivel to get downvoted? Or is it a byproduct of the system?

[actionfromafar]

I was shocked at how shallow that take is. I expected more.

[in-silico]

The purpose of modern prediction markets is to transfer money from gamblers to the market broker.

Communicating insider knowledge is how the brokers legally/morally justify that business model.

[UncleMeat]

People say this but I don't believe that it is true.

The original theoretical purpose was to incentivize the creation of new knowledge, not reward insider knowledge that already exists. For example, to fund research that helps answer some unanswered question.

Today, the purpose is obviously gambling. We can see that clearly from the marketing.

[savanaly]

Not just insider knowledge. Being more willing to put in hard work than anyone else, being better at synthesizing public knowledge, or maintaining a more clear and unemotional outlook all can also lead you to superior outcomes.

[mastax]

That isn’t how they were pitched to the FTC but it does appear to be their ultimate use case.

[altmanaltman]

and facilitate insider trading, like how do people miss that part

[wahern]

To say the purpose of a market is to reveal insider information is how you say insider trading is a good thing without saying insider trading is a good thing.

There's a ton of scholarly debate about it, and at least most of the early stuff was pretty earnest. But rather than the debate becoming more refined and nuanced over time it seems to have bifurcated along partisan (or partisan adjacent) lines like everything else, similar to the Keynesian/Misesian divide.

[js8]

The proof that free markets are efficient (even in the narrow sense economists use this word) relies on an assumption of perfect information. This has been known at least since Akerlof.

The Misesian folks are a lost cause, IMHO. They're hardcore rationalists, self-indulging in circular moral arguments from assumptions that don't apply in the real world.

[names_are_hard]

Yes. And indeed, when aggregated and averaged across all betters, nobody makes any money.

The question isn't what percentage of bets resolve to no, but whether there is a consistent bias in the prices away from the fair price, which has an expected value of 0, and what direction that bias is in.

[hamasho]

I hate that many people or even the news and scientists have already started to see the odds of prediction market as fact.

I'm sure in the near future, policy decisions or war strategies will be decided by prediction markets' odds, if they are not already being used.

[jonahx]

They're far from facts, but have an important advantage over most other sources: the bettors are motivated to predict truth.

News sources are motivated to get clicks, to appeal to certain audiences, and to retain tribal customers. None of these create incentives for truth. You can seek out smart, well-informed and principled journalists who will prioritize truth-seeking over money-making. There are some. But the fact remains you are relying on character to override incentives. With prediction markets, incentives and truth are naturally aligned. This makes them a powerful and valuable resource imo, even if there is a lot of scumminess that comes along for the ride. The insiders, more than anyone, are contributing to the truth signal.

[busssard]

on the other hand, similar to that one old assassination page, where you bet on the death date of people, it might encourage someone to make an event happen and thus fabricate the insider knowledge if the price is high enough.

So the feedback from prediction market turns around, so you can essentially buy events if you put enough money in.

[mvc]

> the bettors are motivated to predict truth.

But also motivated to bend the truth to their bet as the journalist in Israel found.

[Geezus_42]

They are motivated to pick what they believe is most likely to happen. The develope their idea of what is most likely to happen for the news. The reporters use their bets to wrote stories predicting what will happen.

See the loop?

[laughing_man]

Reporters have an entirely different incentive -- they're less interested in what will happen than whether or not they get eyeballs on their story.

[jonahx]

That's not how it works.

First, you have inside traders. Then, among legitimate bettors, you have smart people using multiple data sources (not just the "news") and doing sophisticated analysis that most journalists cannot do, and are not motivated to do -- again, because their incentives are different.

[eru]

No? Where's the loop?

[a11ce]

See also: https://mason.gmu.edu/~rhanson/futarchy.html

[treyd]

That's a massive "if".

[some_random]

Totally, that's the entire conjecture of this bot. My point is just that the odds of the underlying events are irrelevant, what matters is if they're matched with the betting price

[CyberDildonics]

Of course, they were just explaining the basics of statistics.

[pinkmuffinere]

> 73% of all polymarkets do resolve to No though.

I bet the average price for a no bet across these markets is 73 cents.

[llamataboot]

A persistent bias in prediction markets is pricing very non likely events as slightly more likely than they are. ie; a 1% event priced at 4%, etc, because people like to bet long shots.

Whether there is enough of a predictable bias there to snag enough low return high probability bets to beat the vig and not shift the markets I have not looked into in any way,but it is a known bias with them.

The real money to be made in prediction markets is being the ones with the actual knowledge which is arguably why they are useful and why for some topics, people find them abhorrent.

[nearbuy]

I think you get less return on investment for the same absolute edge in percentage points. A 1% event priced at 4% gets you a 3/96 = ~3.1% return. A 53% event priced at 50% gets you a 6% return. You nearly double your returns by investing in the latter market even though they're both off by 3 percentage points.

If the market isn't resolving soon, the small return might not be worth it.

[jjfoooo4]

It might be a bias in terms of the probability of events, but I'm not so sure this is a market inefficiency in terms of actual trading strategy. If true odds are 1% and the event is priced at 4%, I can sell NO for a 3% edge... but lose 100% once out of a hundred. Doesn't seem worth it!

[bargainbin]

71 cents*, the bookie gets a cut either way it goes.

[Cthulhu_]

This is the truth of the matter, ultimately nobody wins except the bookie, who profits either way.

[eru]

Hedging can itself be a useful service, even if the customer doesn't make money on average. Have you heard of insurance?

[benmanns]

On Polymarket you can be the bookie and put up a yes at $0.72 and no at $0.74 if you’re confident in that 73% estimate.

[thaumasiotes]

In fact, Polymarket will subsidize you to do this:

https://docs.polymarket.com/market-makers/overview

https://docs.polymarket.com/market-makers/maker-rebates

[zahlman]

Even if a cut isn't taken and there aren't other inefficiencies, any money tied up in long-term predictions is earning 0% instead of whatever the current risk-free rate of return is.

[xrisk]

Assuming that the prediction market is perfectly priced right? How accurate is that assumption, or are you counting that as an “inefficiency”?

[eru]

Earning less than the risk free rate is a 'cut being taken'.

[bradleyjg]

IBKR relentlessly advertises on the radio, so I’m aware that on their scheme you earn an interest like incentive coupon for every day you hold open the position.

[anonym29]

Happy IBKR customer here. ForecastTrader has absolutely horrific liquidity outside of maybe 30-40 large contracts. The rest is all market makers that only offer 10-100 or so shares at each price point before bumping up a penny or two. No knock on IBKR as a whole, but you can't even effectively buy on most events or outcomes without slippage eating away your entire edge, and forget about real serious positions above a few grand entirely outside of those 30-40 big contracts.

[mr_00ff00]

Untrue for polymarket. True for kalshi. No bookie fees on polymarket

[pinkmuffinere]

Wow that's news to me. How does polymarket make money if not from fees?

[SirSourdough]

It doesn't seem like it's strictly true that they don't charge trading fees.

From their docs, it looks like they charge fees to bet "takers" (as opposed to makers), but exclude the geopolitical and world-events markets where they don't charge fees.

I have to imagine that may be related to some of the blow-back towards prediction markets about profiting on topics like war & their potential for manipulation.

Given it sounds like the bot bets everywhere other than sports, many of those categories would likely have fees in this case.

[CrazyStat]

Polymarket charges “taker” fees (people removing liquidity by matching listed orders) on most markets. Geopolitics markets are exempt. A portion of the collected fees then get redistributed to “makers” (people who provide liquidity by listing orders for others to match). Presumably the rest of these fees make up polymarket’s revenue.

[OJFord]

Which is essentially also providing a platform for making the book for the other platform, on which 'bookie fees' are charged, but Polymarket itself only keeps a certain cut of it, for facilitating but not actually book-making.

[nl]

They emit new (crypto) tokens which they can sell

[richarlidad]

trying to become bloomberg by selling to institutions

[dlgeek]

Wouldn't it be 75 cents then? (The cut would come out of higher pricing, since the payout is always a dollar).

[eru]

Well, 75 cents for you buying the bet, 71 cent for you selling the bet.

Or something like that.

[traderj0e]

It's not. But also a lot of those stats thrown around are misleading.

[pinkmuffinere]

If the average no costs less than 73 cents, but the 73% of all polymarkets resolve to No, that would imply that the nothing-ever-happens strategy here is profitable. Are you claiming that it is profitable? Or are one of those premises incorrect?

Edit: conversely, if the average no costs _more_ than 73 cents, but the 73% of all polymarkets resolve to No, that would imply that an everything-always-happens strategy is profitable (neglecting slippage)

[Majromax]

> Edit: conversely, if the average no costs _more_ than 73 cents, but the 73% of all polymarkets resolve to No, that would imply that an everything-always-happens strategy is profitable (neglecting slippage)

Or just the bid-ask spread; price no at 73.25 and yes at 27.5 and you have a profitable but theoretical mid-market price.

[traderj0e]

From what I've seen and tested, it's been profitable, for the reason you said. Variance and other caveats caused me to not pursue it further. https://news.ycombinator.com/item?id=47754918

[cheschire]

Are you willing to pay $.27 for that perspective? Sounds like we have a market!

[mrandish]

> I bet the average price for a no bet across these markets is 73 cents.

Behavioral economics has already answered the question of whether humans are, on average, perfectly rational economic actors. They are not.

To the contrary, there is substantial evidence indicating a meaningful number of humans will mis-estimate the likelihood of uncommon future events.

[cortesoft]

It doesn't matter if a vast majority of people are not rational economic actors. It only takes 1 rational actor with enough capital to take the other side of all the bad bets, and the market will be priced correctly even if the other 99 people are irrational.

[Majromax]

'Enough' [capital] is doing a lot of work in that sentence. In the limit of a one-sided irrational market, the 'rational actor' would need to take the other side of every open transaction.

[cortesoft]

Yeah, but in the limit of a one-sided irrational market, the rational actor is going to be given as much capital as he can take.

[eru]

In the long run. In the short run, our rational actor will be constrained by the Kelly criterion, well and whatever outside funding she can raise.

[skywalqer]

Well, if the price would be incorrectly set, then bots like this one would make money, which would in sufficient time cause the market to adapt and the average price would change so the bot doesn't work.

[wat10000]

That doesn't matter so much when it happens in a place where people can make money from other people's irrationality. Even if there are a bunch of irrational people placing bad bets on uncommon future events, rational people looking to make a buck will take the other side of that bet, until the price is sensible.

The alternative would be that there's a bunch of free money sitting there waiting for someone to decide to pick it up, and nobody is, not even you.

[eru]

Actually, having a bunch of noise traders around is a great attraction for the ration people to show up.

[r0fl]

I’ll take the “no” side of that bet ;)

[kristopolous]

Why would outcomes match perceptions?

The whole premise of gambling is that they don't

[gowld]

The whole premise of prediction markets is that the few people whose perception do match outcomes make bets to push the money-weighted average perception toward outcomes. If perceptions still don't match outcomes at that point, average return is 0 minus transactions, with high variance.

[kristopolous]

huh? that sounds like ideology and not empirical observation.

[bofadeez]

That's just how limit order books work with mark-to-market pricing

[xrisk]

Could you point me towards some resource that would help me understand what you wrote? Genuinely curious about how this stuff works

[paulddraper]

But in aggregate they might.

[tekno45]

its funny, tells you it barely works, and its a good meme.

Successful project imo.

[craftkiller]

In addition, it serves as a good template for writing your own polymarket bot with whatever logic you want.

[ryandrake]

For the uninitiated, I believe the meme comes from Reddit, where there is one criticism subreddit, r/ThatHappened where people accuse other Redditors of making up stories of events that never actually happened, and then a meta-criticism subreddit, r/Nothingeverhapens, where people make fun of r/ThatHappened as conspiracy theorists who think everything posted online is fake. Hard to tell how much of each subreddit is trolling and how much are people earnestly criticizing each other.

[eudamoniac]

It comes from 4chan, like all decent memes

https://knowyourmeme.com/memes/nothing-ever-happens

[theginger]

Does the existence of that knowledge make a slight bias lowering the odd on no? I could fork this and with a 1 line change earn dozens of dollars as long as I don't tell anyone what that secret change is.

[zahlman]

No, I think the bias is really just a reflection of how propositions are phrased. We could imagine a mirror-world prediction market that offers all the same propositions, but phrased oppositely: e.g. a market in "person X will die by Y date" becomes a market in "person X will survive until Y date". And in that market, we would see a bias towards propositions resolving as Yes.

[raincole]

> 73% of all polymarkets do resolve to No though.

I wonder what it means exactly. Typical Polymarket looks like this:

X happens before May. [Yes][No]

X happens before June. [Yes][No]

X happens before July. [Yes][No]

...

So even if X ended up happens in December, it's still 12.5% Yes and 87.5% No?

[traderj0e]

That's one event containing three markets, each yes/no. And in a way each market is two separate markets, buy/sell yes and buy/sell no, but they mirror each other.

[raincole]

I understand that. That's not my question tho. I am asking for the exact meaning of the 73% number.

[lazyasciiart]

And how do you report it in May?

[nicman23]

reminds me of that one story when someone won a poker bot competition by always going all in