4 ms·

Do you have citations for this? The academic papers I've read on prediction markets are (broadly) positive.

gcb0 8y ago
you are probably reading crystal ball economists. do they also write about other means to pick stock besides analyzing the company?
- skilgarriff 8y ago
  Mind suggesting the economists to read, rather than just suggesting he is reading the wrong economists? I'm admittedly naive in this subject, but the name calling doesn't help. On the second point - there is solid evidence that, yes there are ways to pick stock besides JUST analyzing the company - see Momentum investing https://www.aqr.com/Insights/Research/Journal-Article/Fact-Fiction-and-Momentum-Investing https://www.aqr.com/Insights/Research/Journal-Article/Fact-F... I've seen plenty of critics of the efficient market hypothesis, and Fama himself has said that the market is not efficient.
  - skolsuper 8y ago
    Maybe you're agreeing with GP? Analysing the companies would not be a profitable way of picking stocks in a genuinely Efficient Market.
cryptobeanbaby 8y ago
To quote a prior Senate Minority Leader Tom Daschle on the floor of the Senate: "How long would it be before you saw traders investing in a way that would bring about the desired result?" As in, if one found a way to bet against your car remaining in tact and realized sabotaging your car was cost effective to manipulate their bet, then they reap the market pay out. Is this good? https://en.wikipedia.org/wiki/Information_Awareness_Office#Futures_Markets_Applied_to_Prediction_(FutureMAP) https://en.wikipedia.org/wiki/Information_Awareness_Office#F...
- nyolfen 8y ago
  this is the idea behind assassination markets
  - goldenkey 8y ago
    Interesting...so when enough "life insurance" has been taken out on someone, it becomes more profitable to protect them or to kill them, depending on what the relative odds are, and which side the potential assassins have placed their money?
- allenlavoie 8y ago
  We already have a much more liquid terrorism futures market, i.e. the regular stock market. Worrying about incentives for a large attack from a prediction market is missing the ocean for a hypothetical raindrop. Incentives in smaller markets (e.g. local elections, or personal car crashes as you say) are super interesting though.
- nybble41 8y ago
  > As in, if one found a way to bet against your car remaining in tact and realized sabotaging your car was cost effective to manipulate their bet, then they reap the market pay out. You just described insurance fraud. And just like in insurance, the fix is to be very careful about how you describe the "win" condition—not just "will the car become damaged" but "will the car become damaged through no fault of the owner" (to begin with; the actual terms would be much more complex).

gcb0 8y ago

you are probably reading crystal ball economists. do they also write about other means to pick stock besides analyzing the company?

skilgarriff 8y ago
Mind suggesting the economists to read, rather than just suggesting he is reading the wrong economists? I'm admittedly naive in this subject, but the name calling doesn't help. On the second point - there is solid evidence that, yes there are ways to pick stock besides JUST analyzing the company - see Momentum investing https://www.aqr.com/Insights/Research/Journal-Article/Fact-Fiction-and-Momentum-Investing https://www.aqr.com/Insights/Research/Journal-Article/Fact-F... I've seen plenty of critics of the efficient market hypothesis, and Fama himself has said that the market is not efficient.
- skolsuper 8y ago
  Maybe you're agreeing with GP? Analysing the companies would not be a profitable way of picking stocks in a genuinely Efficient Market.

cryptobeanbaby 8y ago

To quote a prior Senate Minority Leader Tom Daschle on the floor of the Senate: "How long would it be before you saw traders investing in a way that would bring about the desired result?" As in, if one found a way to bet against your car remaining in tact and realized sabotaging your car was cost effective to manipulate their bet, then they reap the market pay out. Is this good? https://en.wikipedia.org/wiki/Information_Awareness_Office#Futures_Markets_Applied_to_Prediction_(FutureMAP) https://en.wikipedia.org/wiki/Information_Awareness_Office#F...

nyolfen 8y ago
this is the idea behind assassination markets
- goldenkey 8y ago
  Interesting...so when enough "life insurance" has been taken out on someone, it becomes more profitable to protect them or to kill them, depending on what the relative odds are, and which side the potential assassins have placed their money?
allenlavoie 8y ago
We already have a much more liquid terrorism futures market, i.e. the regular stock market. Worrying about incentives for a large attack from a prediction market is missing the ocean for a hypothetical raindrop. Incentives in smaller markets (e.g. local elections, or personal car crashes as you say) are super interesting though.
nybble41 8y ago
> As in, if one found a way to bet against your car remaining in tact and realized sabotaging your car was cost effective to manipulate their bet, then they reap the market pay out. You just described insurance fraud. And just like in insurance, the fix is to be very careful about how you describe the "win" condition—not just "will the car become damaged" but "will the car become damaged through no fault of the owner" (to begin with; the actual terms would be much more complex).