[jpadkins]

yes it is good in many scenarios.

Imagine bad (incorrect and potentially harmful) information is public knowledge. Examples are "X cures cancer" or "Is Y dangerous to consume".

A prediction market will be seeded by public knowledge (of course it cures cancer or its safe to consume), which you describe "suckers". History is filled with many examples of bad public knowledge that turned out to be false (e.g. DDT is safe pesticide).

An insider (someone who knows the drug trial results, or works at the Corp creating the harmful substance) is incentivized to trade on that knowledge, which creates a better informed public (via people who pay attention to prediction markets).

Why does secret(insider) knowledge exist? To the benefit of the organization that wants to keep the knowledge secret. Insider trading laws purpose is to keep Corp and gov orgs in power. They prevent the dissemination of true information (for private power). Prediction markets incentivize the dissemination of true information, a public good.

[haritha-j]

Unless of course the evil DDT corp bets money on it being safe, skewing the market.

[jpadkins]

That is the beauty of the Resolution part of prediction markets. If evil DDT Corp bets money to skew the market, then they lose even more money on the Resolution (assuming the resolution is deterministic of harm and has not been manipulated).

[mrguyorama]

Oh good, the entire premise of the value of the system rests on an axiom with such giant and obvious flaws that you could drive a supertanker through it.

Does the resolution use the scientific paper that says "DDT is safe" or the one that says "DDT is unsafe"? There's no objective resolution of scientific facts.

"Prediction markets provide better information" in the exact same way that "Markets are efficient". You need to interrogate what "Better information"/"efficient" actually means even if you take the claim at face value, and also it's just not a model that maps to reality well.

[vanuatu]

insider trading is bad because it drains liquidity from the markets which reduces its predictive power

if i am the uninformed, without insider trading laws what is the incentive for me to bet when I know there are insiders?