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[1] provides a good answer to this question. "The outcome becomes more predictable over time. This is because the payoff depends on the accurate prediction of

[1] provides a good answer to this question. "The outcome becomes more predictable over time. This is because the payoff depends on the accurate prediction of an outcome of an event. Therefore, people will put in more effort to come to the most accurate conclusion. As a larger number of people do more market research to come to the most likely conclusion, the predicted outcome will lean more favorable to one side. If you place a bet on a coin flip, the outcome will always be 50% heads, 50% tails. There are no external market conditions that will influence the outcome. Luck plays a major role, and this is called gambling. But prediction markets rely on the collective wisdom held by a group of people on the probability of a future event materializing." [1] https://cointelegraph.com/explained/prediction-markets-explained https://cointelegraph.com/explained/prediction-markets-expla...

pbhjpbhj 8y ago
Can you show that predictions are true rather than just being perturbations. To me it looks like trading drives markets to respond (beyond large obvious fundamentals changes), rather than providing usable predictions. Moreover, assume they are predictive, do they target funds to where society needs them. Finally if people are good at prediction, using algorithms for example, then those algorithms provide the required prediction and we should use those to target resources and retain wealth in the market rather than giving out 40% of the wealth (UK) just to get some predictive power. I think the value added by the market is vastly over-stated in the present model.
- CryptoPunk 8y ago
  >>To me it looks like trading drives markets to respond Respond to what? The markets are about events that have not happened. The payout is directly proportional to the predictive power of the market purchase. >>Finally if people are good at prediction, using algorithms for example, then those algorithms provide the required prediction and we should use those to target resources and retain wealth in the market rather than giving out 40% of the wealth (UK) How do we incentivize people to generate these predictive methods, let alone release them for public use, without a compensatory scheme like a prediction market?

pbhjpbhj 8y ago

Can you show that predictions are true rather than just being perturbations. To me it looks like trading drives markets to respond (beyond large obvious fundamentals changes), rather than providing usable predictions. Moreover, assume they are predictive, do they target funds to where society needs them. Finally if people are good at prediction, using algorithms for example, then those algorithms provide the required prediction and we should use those to target resources and retain wealth in the market rather than giving out 40% of the wealth (UK) just to get some predictive power. I think the value added by the market is vastly over-stated in the present model.

CryptoPunk 8y ago
>>To me it looks like trading drives markets to respond Respond to what? The markets are about events that have not happened. The payout is directly proportional to the predictive power of the market purchase. >>Finally if people are good at prediction, using algorithms for example, then those algorithms provide the required prediction and we should use those to target resources and retain wealth in the market rather than giving out 40% of the wealth (UK) How do we incentivize people to generate these predictive methods, let alone release them for public use, without a compensatory scheme like a prediction market?