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by Glyptodon
6 days ago
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This reminds me of how people who worked for Facebook despite it being obvious that nobody with moral fiber should work for Facebook are more listened to when criticizing Facebook than people who realized the obvious to begin with. It's such a farce. But it also reminds me that prediction markets are one of those things that are transparently a terrible idea because they create problematic incentives, and not just because people ruin their lives gambling. If you can make $1 million by triggering something that or getting somebody to trigger something that basically has no business happening, whether it's stripping on the Senate floor, causing a volcano to erupt, or crops yields to reduce by secret herbicide dusting, or any other bologna, somebody will do it if the balance makes it worthwhile. Likewise, they give people reasons to vote that are negative - "I have $100 on prop XYZ passing, of course I support it." (Though side note: the ubiquity of betting being super terrible for society because people can't handle gambling at all is one of those things that I've been super surprised by that seems to have good evidence now. I guess because gambling mostly just doesn't do it for me to the degree that I find it shocking just how addictive it is and just how much it exacerbates bad situations for many people.) And I can't see how there's any benefit that's bigger than the problems. If prediction markets are better than Nate Silver, why is it worth all the problems to society for that extra accuracy margin? I can see why individual actors might find value, but I don't see how their value accrues to society in any way that makes it worth it. |
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People mostly don't do this because most of the things which you could do to move a stock price are highly illegal, and anyways there are laws against market manipulation. And I doubt people vote to benefit their portfolio (except for homeowners) because there's so little chance that any individual person's vote will result in a tangible benefit to the corporation. People mostly vote out of a sense of duty; the chance of your vote individually actually changing a tangible outcome is miniscule.
The problem seems to be in what it's used for. Prediction market supporters never intended it to be used primarily for sports gambling, much less used to override state sports gambling laws at the federal level. That was never part of the original proposal for prediction markets. I can see a legitimate use case for e.g. the Fed using conditional prediction markets to inform monetary policy; in that case, even a small increase in marginal accuracy/certainty could plausibly be worth billions of dollars to society.
Everyone here seems so sure that they knew prediction markets were a bad idea. But it seems to me that most of the harm comes from the CFTC regulated securities loophole. Without that, prediction markets on sports would be limited to states where sports gambling was already legal, and the marginal harm would be minimal. And I didn't see anyone predict that mechanism; if they did, they never got much traction. This is exactly the sort of problem prediction markets, in their ideal form, are meant to solve.