[Imnimo]

I could imagine cases where prediction markets could offer some actual insight, but in practice they seem few and far between. Most markets I've seen devolve into one or more of: betting on unimportant events (e.g. sports games), insider trading, or poorly written ambiguous resolution criteria. It's just hard for me to imagine that, on net, these markets will offer more societal good than the harm we've seen from sports betting.

[autoexec]

> I could imagine cases where prediction markets could offer some actual insight

I could imagine that there's very little insight to be gained when some 23 year old has so little hope for his financial future that he's spending some of what he earned last night delivering food for uber eats on making a completely uninformed bet on a geopolitical situation involving a country he couldn't even find on a map just in case it pays out well enough that he can afford some of the needed medical care he's been putting off. That's the type of user I imagine most people participating in prediction markets are. It's telling that the vast majority of the people making bets lose their money. Are their predictions really valuable data?

[ghaff]

ThAt's one of the interesting(?) aspects of prediction markets. Some meaningful percentage of people in the market need to be bringing some useful insight. If everyone is just making random guesses, the market isn't very useful (other than, perhaps, financially to the lucky).

[Silamoth]

What insights are being gained? Every time this topic comes up, I see someone vaguely mentioning insights from prediction markets. But no one ever has concrete examples - real or even hypothetical.

Can you give an example of insights derived from prediction markets? Who benefited from the insights, and how did they act on the insights?

[roryokane]

Hypothetically, someone who doesn’t live in the United States and is considering accepting a job there might appreciate the insight from prediction markets on the upcoming U.S. presidential election. If the likely candidate promises to enact policies that would make that person’s life worse, that would give them reason to reject the job offer.

Other hypothetical prediction markets whose insights would be useful include those used in futarchy, a proposed government system in which decisions are made based on betting markets. The proposal: https://mason.gmu.edu/~rhanson/futarchy.html; some analysis: https://www.lesswrong.com/w/futarchy. In futarchy, prediction markets would be set up for, for example, “average happiness of citizens (as measured by regular survey) will increase in 1 year if Bill ABC passes” and “average happiness of citizens will increase in 1 year if Bill ABC does not pass”. The government would pass or reject proposed bills according to whichever market predicts higher happiness, and the market describing the event that did not happen would be closed and its money refunded.

[Shocka1]

I would agree that the insights provided are little to none. I think this is some sort of fallacy that being being PR'd by tech bros with a lot of skin in the game attempting to come up with some kind of positive reason to sell to people. It's fairly easy to see right through it though.

WSJ had an insightful article that claimed .1% of the accounts take 67% of the profit, along with some other facts: https://www.wsj.com/finance/investing/polymarket-kalshi-bett...

Full disclosure, I've written performant market making algorithms for Polymarket. I'm actually a fan of these markets and enjoy the statistics and engineering challenges they present, but see it as a net negative on society. I'd gladly give up my PnL if it was a net positive on the American psych.

[autoexec]

It looks like the markets aren't very useful except for the small percentage of people with inside information, the exceptionally lucky, and the platforms themselves that get to take a cut of the action and/or collect personal data to sell.

[bobbylarrybobby]

Getting inside traders to publicize their knowledge for a price is like half of the point of prediction markets

[Silamoth]

I asked this elsewhere, but do you have an example of this knowledge? Have prediction markets ever revealed genuine knowledge? If so, has anyone ever acted on the newly revealed knowledge in a meaningful way?

[DanielVZ]

Does polymarket then have a full profile of its users to be able to distinguish insider trades vs noise?

Genuine question as I haven’t used the site and everything I know about them are comments and some articles.

[LewisVerstappen]

Insider trading does offer actual insight