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There is no StackOverflow for trading, or betting. Nobody gives away their edge for free, although they may give away their trades. >I don't really see how tha

There is no StackOverflow for trading, or betting. Nobody gives away their edge for free, although they may give away their trades. >I don't really see how that cashes out in an inaccurate overall system Imagine a strategy that has a 50% chance of blowing you up completely over 10 years, but nets you 50% more profit if it works. The average return of this strategy is 25% less than a safe strategy (zero risk, zero gain), but it has a 50% chance of winning in this marketplace. If it were real money, nobody would go near it. Ok, now imagine there's 100 people running strategies with that profile and 100 running the safe strategy. All of the top spots will be held by the suicidal strategy. This is an artificial example but you get the point. Real money forces you to avoid that risk profile as soon as you identify it.

crazygringo 6y ago
This is exactly it. I'm surprised I had to scroll down this far to find the actual explanation.
darawk 6y ago
> There is no StackOverflow for trading, or betting. Nobody gives away their edge for free, although they may give away their trades. This isn't trading, though. It's forecasting. You could make that argument about the sub-category of economic forecasts, perhaps. But not about more general things, like presidential elections. > Imagine a strategy that has a 50% chance of blowing you up completely over 10 years, but nets you 50% more profit if it works. The average return of this strategy is 25% less than a safe strategy (zero risk, zero gain), but it has a 50% chance of winning in this marketplace. If it were real money, nobody would go near it. People go near real money strategies like that all the time. That's all WallStreetBets is, or the financial crisis, for that matter. I do take your point that this behavior may be more pronounced in a community like this, but I don't think it invalidates the model.
- bananaface 6y ago
  >This isn't trading, though. It's forecasting. That's not my point. The point is people don't give away predictive edges for internet points (or reputation). There are many reasons why but the lack of a betting & trading StackOverflow is one symptom. It's just an example, but TBH it's not that relevant since this market wouldn't involve revealing edges. >People go near real money strategies like that all the time. Absolutely, and it's a problem with real funds. But: - It's a lot rarer. - There's a much stronger incentive for other people to quietly take the opposite sides of those bets, which normalises the market. We'll see what effect it has, but I think this marketplace will just end up following the values on PredictIt.

crazygringo 6y ago

This is exactly it. I'm surprised I had to scroll down this far to find the actual explanation.

darawk 6y ago

> There is no StackOverflow for trading, or betting. Nobody gives away their edge for free, although they may give away their trades. This isn't trading, though. It's forecasting. You could make that argument about the sub-category of economic forecasts, perhaps. But not about more general things, like presidential elections. > Imagine a strategy that has a 50% chance of blowing you up completely over 10 years, but nets you 50% more profit if it works. The average return of this strategy is 25% less than a safe strategy (zero risk, zero gain), but it has a 50% chance of winning in this marketplace. If it were real money, nobody would go near it. People go near real money strategies like that all the time. That's all WallStreetBets is, or the financial crisis, for that matter. I do take your point that this behavior may be more pronounced in a community like this, but I don't think it invalidates the model.

bananaface 6y ago
>This isn't trading, though. It's forecasting. That's not my point. The point is people don't give away predictive edges for internet points (or reputation). There are many reasons why but the lack of a betting & trading StackOverflow is one symptom. It's just an example, but TBH it's not that relevant since this market wouldn't involve revealing edges. >People go near real money strategies like that all the time. Absolutely, and it's a problem with real funds. But: - It's a lot rarer. - There's a much stronger incentive for other people to quietly take the opposite sides of those bets, which normalises the market. We'll see what effect it has, but I think this marketplace will just end up following the values on PredictIt.