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The problem is that there isn't a universally trusted arbiter for the final result. Prediction markets can be useful when what is being predicted can be objecti
by root_axis 8y ago
The problem is that there isn't a universally trusted arbiter for the final result. Prediction markets can be useful when what is being predicted can be objectively verified in the future but if something like "Will ObamaCare destroy the economy?" was the question in 2009, in 2019 half the country will tell you it did destroy the economy, the other half will say it didn't.
- munk-a 8y agoSome actors may also be willing to spend out-sized effort propping up a losing opinion to sway popular perception too. Perhaps you're a Koch brother and decide to inject billions of dollars into such a question due to the financial payoff you could reap if it comes true. I think such a market suffers from the efficiency created by a price point difference when the result of the prediction can effect your income - if a particular policy discussion will cost you 5 billion dollars then you can, internally, play with that cost and the likelihood of being able to tip a market. If you can guarantee a positive outcome by investing 4.5 billion then there is a rational motivation to do so.