You don't need Colossus-level compute or a genius-level IQ to evaluate the question "Will the steam machine cost more than $700 at release", or "Will 2026 be the hottest year on record".
You are not evaluating those questions, you are evaluating the probability of that two things happening, and you need to evaluate it better than the other people to win.
There are no easy questions, the difficulty is set by the skill/investment level of your competition.
I'm confused by how you're modeling these markets.
Let's say I am quite sure that the Steam Machine will cost more than $700 dollars, and I buy a 'yes' lot for 65 cents on the payed-out dollar, those are the odds at my buy-in time.
Where exactly now do the other participants' bets on the same market influence my chance to win/lose? How am I up against them and not the question "will my prediction come true"?
Sure, before my buy-in the odds, and thus the value fluctuate on account of the market movements, but once I'm in I'm in?
How exactly do you think the price is set at 65 cents, if not by the other market participants? When you win, who do you think is paying you out from the other side of the bet? When you lose, who do you think your money goes to?
Not only did you miss the point of the conversation entirely, you're attacking a point I explicitly addressed in my comment. I well understand how the system works, ggps comment had me confused about their perspective.
I didn’t miss the point at all. Once you’re in, unless you want to sell your stake, you’re in. But the entire point is that at the time of your bet, you’re taking a position that’s inherently disadvantaged. If there was any more EV to be gained, people with more money than you would have exhausted it. So without insider information, you’re flipping a coin but the house takes a cut.
>if there was any more EV to be gained, people with more money than you would have exhausted it
In a perfect market that everyone participates in and in which everyone has perfect information, but not down here in messy reality. Your logic would have you you seeing a dollar on the ground and without further investigation go "Oh that can't be real, if it were someone would have picked it up already!" Or refusing to play chess against anyone because Magnus Carlsen could beat you.
Sure but that level of confidence is what would also eventually wipe you out because gamblers are not necessarily known for proper risk management. You could win 10 bets in a row but then it would only take one bet that you had 100% conviction on for you to lose and you get wiped out
You're sneaking in a prior assumption that people will act stupidly, and then make the argument "Well since they act stupidly they will have bad outcomes". That's like me claiming "Your startup is gonna fail, I can tell, because you'd need to be able to read and write to make it in business!"(sneaking in the prior assumption that the person in question is not in fact able to read or write)
Your strategic consideration is wise, though. 'Diversification' is one of the first things people will teach wrt investment literacy.
>just to be clear we are discussing gambling and not investing
Where's the demarcation? The whole point of this sub-thread was "you absolutely can predict the outcome of some of these markets". If you do your due dilligence/leverage your domain knowledge to buy a thing you expect to pay dividends at a later date, how is that not investing? Are government bonds gambling in your thinking?
Your prior about people acting unwise is still sneaking in via the assertion that we are talking about gambling.
What's wrong with me is I'm autistic enough to expect people to be able to follow arguments. I did not say "There are no differences between Government Bonds and Prediction Markets", what I said was "Let's find where the line between gambling and investing is, here's an example from which to pick apart the features that make gambling vs investing".
I don't know much about gambling but is it not common to set for yourself max bets so your pool of cash doesn't deplete like you do when buying stocks or trading options so you can leverage up or down. I know it's a little different, but there is a similar principle.
Maybe only allow people to spend 1/5 their pool of cash per bet so it never reaches zero
You cannot bet 50/50 on that question. Hence, you aren't actually asked to evaluate whether the answer to the questions you posted is 'yes' or 'no'. You are instead asked 'is the actual chance of it happening higher or lower than the current breakeven chance as posted on Kalshi / Polymarket'.
Can you help me better grasp this? My intuition is thus: Sure, if I'm going at it like a proper rationalist, I'd have to do things like calculate expected value or whatever(I fully admit my lack of foundational knowledge when it comes to statistics), but at the surface the questions I feel I'm being asked is: "Is this a winning ticket?" and then "How much would you pay for a ticket set to win $1?" The latter question being obviously meaningless except for the obvious: It does not matter in the slightest, as long as I don't pay 1$ or more.
So you could see how the face odds are irrelevant to me, only my internal yes/no intuition? Obviously this is not optimized, opportunity cost etc etc, but is there a big hole in my thinking you could point me in the direction of?
The betting topic is only a part of the equation. Should you bet $100 to win $5 on the Steamdeck price? Should you sell your bet before the Steamdeck even comes out?
But that's about juicing the maximum amount out of each bet, not about the matter of simply winning or losing(which was what I was originally responding to). If any situation one doesn't take for all its worth is a loss then I agree that it's damn near impossible to win, but this would be true everywhere.
I am intentionally flattening these trades to simple win/loss affairs(not just for the sake of this argument).
You're playing the game at a higher level and "complaining" at the increased complexity(I don't mean to say you are complaining, I just couldn't think of a better word). You're talkkng about the 80% that get you the last 20%, I'm talking about the 20% that get me the 80.
There are no easy questions, the difficulty is set by the skill/investment level of your competition.