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Absolutely and people might be interested that in this case the prediction market for LK-99 is reacting in real time to new tweets from people trying to replica

Absolutely and people might be interested that in this case the prediction market for LK-99 is reacting in real time to new tweets from people trying to replicate. The “yes” spike to 32c yesterday was in response to a twitter account posting an image of a levitating grain in a tube. The credibility of that replication attempt was then evaluated by many and the market backed off afterwards. There is always a subtle anti-markets theme on many HN debates, likely from highly educated ans literate posters. I believe we still in this age simply don’t provide proper education on the massive benefits that markets bring to so mang problems. They are literally the nervous system of our incredible global organic economy. In this case, why in world would you have something against prediction markets? Is it fascinating the risk of a nuclear weapon detonation by December 31st of 2023 is accessed to be around 9%? If anything we need to liberalize laws around prediction markets. Currently they are relagated to off shore and various backwaters. The CME should be listing tbese types of markets ideally and institutional money hiring top analytical talent would then participate.

mellosouls 3y ago
There is always a subtle anti-markets theme on many HN debates, likely from highly educated ans literate posters. I believe we still in this age simply don’t provide proper education on the massive benefits that markets bring to so mang problems I think we are all too aware of markets and their benefits and disbenefits. It's not clear why you think the "education" is missing only in one direction.
- alchemist1e9 3y ago
  You don’t observe a frequent knee jerk like anti-markets reaction from comments across HN? What are good examples of their “disbenefits”?
  - mellosouls 3y ago
    You don’t observe a frequent knee jerk like anti-markets reaction from comments across HN? I find HN one of the most balanced online forums on most subjects. What are good examples of their “disbenefits”? The race to the bottom is all around us.
    - alchemist1e9 3y ago
      > The race to the bottom is all around us. You live in SF by chance? Because globally and historically that’s absolutely not what the data says about markets.
      - RedCondor 3y ago
        Marketers take a lot of credit for achievements that don't belong to them. Take, for example, Hayek's rather more honest commentary on vacations and human rights generally: >[The 1948 Universal Declaration of Human Rights] is admittedly an attempt to fuse the rights of the Western liberal tradition with the altogether different concept deriving from the Marxist Russian Revolution. It adds to the list of the classical civil rights enumerated in its first twenty-one articles seven further guarantees intended to express the new ‘social and economic rights’. (…) The conception of a ‘universal right’ which assures to the peasant, to the Eskimo, and presumably to the Abominable Snowman, ‘periodic holidays with pay’ shows the absurdity of the whole thing. (…) What are the consequences of the requirement that every one should have the right ‘freely to participate in the cultural life of the community and to share in the scientific advances and its benefits’. (…) It is evident that all these ‘rights’ are based on the interpretation of society as a deliberately made organization by which everybody is employed. They could not be made universal within a system of rules of just conduct based on the conception of individual responsibility, and so require that the whole of society be converted into a single organization, that is, made totalitarian in the fullest sense of the word. https://redsails.org/concessions/ https://redsails.org/concessions/ The decay we witness today is simply the rollback of concessions copied from socialist states and artificially bolted onto capitalism to reduce socialist ferment. The consequences are predictable.
        alchemist1e9 3y ago
        I see. So this is about “the right” to take a vacation? What are you talking about and what am I? we seem to live in different realities. I can’t even imagine somehow I would have a government “right” to take a vacation. Who is paying for it? I don’t get it.
  - Bluestrike2 3y ago
    Any number of the many, many, negative externalities[0], where market transactions are unable or unwilling to capture the often serious negative effects of an activity in its price, that have been documented and researched by economists over the years? Air pollution and greenhouse gases are just two of the biggest examples, with absolutely massive external costs that are not captured in the price. There are even positive externalities with various activities where societal benefits can't be captured in the price. Regulatory capture[1] and rent-seeking are also examples where markets can fail. There are plenty of others. Markets are just tools for the exchange of economic activity. Nothing more, nothing less. But as a society, we tend to ascribe all sorts of greater meaning to them that make it harder to recognize where they come up short and actually do something about it. If knee-jerk anti-market reactions are bad, then might I propose that knee-jerk pro-market reactions are just as bad, insofar as they gloss over or outright ignore the negative aspects of markets as we've implemented them? Imagine a screwdriver. It does one job: turn a screw. If you have the right one, matched with the corresponding screw drive--let's just assume a Philips screw--at the right size, it does its job perfectly. But it'll get less effective as the tip and screw sizes diverge. What about other screw drives? There are a bunch of types where a Philips will sort of fit, and you'll probably be able to turn the screw, albeit with more effort and a greater likelihood of camming out and damaging the screw or your screwdriver. A flat-head screwdriver gets used and abused in all sorts of fun and interesting ways. You can use a flat-head screwdriver to pry open a can of paint, but an actual paint can opener is still less likely to distort or damage the lid or slip and injure you. At some point, you open the tool box and grab another tool. Maybe it's another screwdriver, because you're turning another screw. Or maybe it's a different tool altogether, one designed for the specific task at hand. Markets aren't so different, if not quite as narrowly-defined as a screwdriver. They work well in some areas, less well in others, and in some, they simply can't function. All to varying degrees. Recognizing their failures and limitations allows us try and develop policies that address their worst parts while maintaining their more desirable parts. 0. https://en.wikipedia.org/wiki/Externality https://en.wikipedia.org/wiki/Externality 1. https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture
    - alchemist1e9 3y ago
      For the record I believe I agree with you. However I view it as governments are the failure point in the issues you list, not markets. They have outright failed to address the negative externalities as they have been captured by private interests. In my opinion the entire financial system is captured and the regulations they tend to introduce are simply to allow the corrupt private entities further control. One neat part of anonymous online prediction markets using unregulated digital currencies is how they exist outside this crony capitalist system. It’s not markets to blame. It’s bad government!
  - kybernetikos 3y ago
    I would describe myself as cautiously pro market, but I think it's hard to deny that they are effective externality seeking machines. If there is any way of providing a benefit while finding a way to impose the cost diffusely, you can bet that the market will find it. Market based systems guarantee that costs will be hidden and imposed on those who don't receive the benefit to the maximum extent possible given physics and law. On top of that, it's interesting that we only use the market concept at the meta level. Vanishingly few of the businesses that compete in the marketplace are internally arranged on market principles. Instead they follow bureaucratic and oligarchic principles internally. And when the survival of the state is on the line because of war, we don't trust markets to allocate resources to get important things built quickly - rather the state takes power to directly cause some things to be built and other things not to be. Although the market gets praised for being good at allocation of capital, I would say it's good in the way evolution is good at finding things that can survive. It might find great solutions that a planned process wouldn't, but it'll take a long time and a lot of things will die in the process.
    - nvm0n1 3y ago
      Isn't military work mostly done by private contractors? It's not like the USAF actually owns and operates its own plane factories. Some companies do approximate market operations internally, any company that has a notion of internal billing or where teams talk about internal customers is to some extent like this. Companies not using market principles internally isn't a strike against markets, if you believe Coase's theory of the firm i.e. companies form at the break even point on transaction costs
  - ajuc 3y ago
    Child labor. Slave trade. Sweatshops. 1000 different environmental catastrophes. You know, the reasons we have regulation. We had markets FIRST, then we got regulation on top of that, and we never looked back.
    - Turing_Machine 3y ago
      All of those things, including environmental catastrophes, existed for millennia before Adam Smith came along.
      - ajuc 3y ago
        So did markets.
    - alchemist1e9 3y ago
      Absolutely government’s fundamental role in human society is regulating against harm. But somehow the narrative is markets are “bad”, they obviously aren’t as they seek out information and efficiency, which is a good thing. Markets are the one’s you should thank for telling you child labor, slaves, and sweatshops are a problem, and the environment issue, so you pressured your government to regulate those issues. Without free markets the alternative would be the government doing all those horrible things, which btw they certain used to. People are mixed up, the primary problem is government failure to regulate and be transparent. It’s very difficult for governments to admit they create the problems so academics and politicians find the boggy man of markets. Kennedy understands this topic well and while it’s unlikely he will win, I deeply hope he can somehow. We need more markets for more things with clear and clean regulations build based on empirical evidence and scientific and not created by lobbyists involved in regulatory capture.
      - ajuc 3y ago
        > But somehow the narrative is markets are “bad” The mainstream opinion is "markets are ok as long as they are well regulated". The only narrative that is trying to compete with that with any success is "markets are perfect without any regulation". Which provokes the rebuttal you refer to. I've yet to see anybody claiming seriously that "markets are inherently bad and can't be saved". Even in communism there were markets, as abysmal as that system was (and I lived in a communist country for 6 years). If our markets right now were regulated enough - we wouldn't have global warming problems. Clearly there's a lot of externalities that aren't priced-in. So - there's too much market and too little regulation.
  - eropple 3y ago
    > What are good examples of their “disbenefits”? Overwhelmingly unaddressed externalities.
    - sterlind 3y ago
      Prediction markets seem blessedly free of externalities though, compared to, say, the energy market (CO2) or textiles (child labor, sweatshops.) except for incentivizing action to tilt the odds, which is weirdly amoral. if you bet on a bad thing happening, you can cash in by making it happen yourself.
      - Regnore 3y ago
        Feeding gambling addictions is the one big externality that comes to mind.
      - someplaceguy 3y ago
        > except for incentivizing action to tilt the odds, which is weirdly amoral. It depends on what's at stake. One example is predicting someone's death. > if you bet on a bad thing happening, you can cash in by making it happen yourself. Yes, and that could be a huge problem, don't you think? It creates an incentive for a bad thing happening that wouldn't exist otherwise. I say this as someone who is in huge favor of markets but also hates their externalities.
  - kakwa_ 3y ago
    Vast topic. Markets definitely have their issues. Here are a few: * The most obvious one is the fact it's an overhead, it doesn't produce goods or services by itself. That's not a major issue, but for example in the US ~5% (~7M of ~150M) of the workforce is dedicated to this overhead. * It's prone to internal instabilities. Too often, the markets disconnect from the underlying economic reality, sometimes with only mild effects (for example, that time petroleum prices went negative), sometimes with more serious ones (2008). * It can lead to overly quantitative views, ignoring the qualitative. It's the "metrics becoming the objective and thus compromising the value of the metric" (example: tech stock prices). * It over-emphasizes individual interests over the collective one (think for example: environmental issues & global warming). Markets definitely have their issues. But so far, the other systems we experimented with (planned economy) were even less able to cope with the incredibly difficult task of balancing an economy. Lastly, it is to be noted that we are not operating in a pure market economy. We are in an hybrid system where States (hopefully representing their people) definitely have a lot of say in economic matters and that's probably for the better.
    - mschuster91 3y ago
      > Markets definitely have their issues. But so far, the other systems we experimented with (planned economy) were even less able to cope with the incredibly difficult task of balancing an economy. The worst issue that the Soviets and other attempts at central planning failed to account for was flexibility and buffer. Say a natural disaster hits and you need an extra amount of concrete for reconstruction, but all the concrete production was already allocated for something else and the plan is considered sacrosanct. Or some innovation (e.g. refrigerators, cars, washing machines) proves to be way more popular than expected, but there is no way to adapt the plan, and so you had to wait years for a Trabant car. Ironically, Western-style "free markets" eventually converged towards the same issue with the unholy invention of "just in time" manufacturing. Both capitalism and communism sought to eradicate "inefficiencies" and destabilized their entire foundation doing so.
      - kakwa_ 3y ago
        To extend, interesting read on the subject of the soviet economy: https://chris-said.io/2016/05/11/optimizing-things-in-the-ussr/ https://chris-said.io/2016/05/11/optimizing-things-in-the-us... HN discussions: https://news.ycombinator.com/item?id=14515225 https://news.ycombinator.com/item?id=14515225 https://news.ycombinator.com/item?id=25084479 https://news.ycombinator.com/item?id=25084479
  - andrepd 3y ago
    >What are good examples of their “disbenefits”? The fact that you are asking this with a straight face tells me everything I need to know. Even the most rabidly capitalist person recognises that there are many severe problems with capitalism (they usually argue that it's simply better than the alternatives).
croes 3y ago
Because markets aren't nearly as clever as is always claimed. Lehmann Brothers anyone?
- alchemist1e9 3y ago
  More like governments aren’t as clever as claimed. The markets would have put all the bad actors out of business permanently and redistributed the resources (like shinny new buildings and engineers) to areas where they would better be utilized. Instead it was turned into an opportunity to launder money at planetary scale. This likely hints to why the truth about the benefits of brutally efficient free markets is distorted in education, it would require the teaching of the remarkable incompetence of collectivism and governments! which we know who won’t like that.
  - cmilton 3y ago
    At what cost though? Surely the wealthy will continue on like nothing ever happened while the rest of us are here holding the bag. Markets seem to benefit some much more than others. Not everyone wants to play this game.
    - alchemist1e9 3y ago
      I was there and know all the details what happened and you nailed the key point, they used fear to have you believe what you wrote. I remember Paulson talking about how ATMs would fail. AIG won’t pay it’s policies. The US equities would crash even further. I hate to tell you but ALL lies, blatant “misinformation” as the new term is. They needed you to be terrified to save their own skins. Blackrock became the largest landlord in the country afterwards. The very companies that facilitated and promoted and literally caused the bubble and crash were rewarded. The waitress and mechanic couple with a baby who had carefully saved up $30K never got the opportunity to buy that house down the street from their parents for $90K at foreclosure from the bankrupt banks. Nope, Blackrock exchanged their bad paper, worth, 20c for $1 to your very government for new fresh cash, bought it instead at $120K, down from $150K. Go crony capitalism! Which isn’t what markets are about.
morelisp 3y ago
Looking past your "rah rah financialization" partisanship, one question: Why is a prediction market for replication per se more interesting than the existing market of all the public companies who would be enriched / wiped out based on the result? (Note that "well, the effect would be too small" flips just as easily around to, the smaller markets are obviously way too noisy given what people are actually getting away with...)
- alchemist1e9 3y ago
  What are people getting away with exactly? Prediction markets more rapidly expose fraud and misinformation than without them. Generally the decision to list a market or contract is based on providing specific utility and information. They provide a better signal to noise and therefore provide risk management as well. The fact you believe markets are a “partisan” topic illustrates exactly the problem. They are objectively and scientifically an important and critical part of humanity, which isn’t taught. As I’ve said elsewhere there reason is obvious as in teaching such facts and information will require simultaneously teach about how horrific and harmful governments have been, and we know who won’t like that.
  - morelisp 3y ago
    Exposing fraud you created the environment for is not particularly interesting.
    - alchemist1e9 3y ago
      Oh so fraudulent SC claims would have no better avenues without prediction markets? I’d argue they would have more and with more capacity not less!
    - jamilton 3y ago
      I don't understand, how do prediction markets create the environment for fraud?
- concordDance 3y ago
tomjen3 3y ago
Prediction markets got Donald Trump wrong on the election night and Brexit too[0]. Given such a huge failure why should we care what they say? [0]: https://archive.li/7m8s6 https://archive.li/7m8s6
- bitshiftfaced 3y ago
  Weren't they still much better than what many media experts were forecasting? Iirc, CNN put Clinton at 97%.
  - andrepd 3y ago
    Serious analysis, like 538 (not just poll aggregators like CNN), put Clinton at ~65%.
- brookst 3y ago
  Are you saying they are no better than chance? Or just that they are not 100% perfect? Because we should deeply care about any source of information that beats chance, even if it is imperfect.
  - tomjen3 3y ago
    I mean that is two fucking big ones to get wrong, no? Would maybe be interesting to see some data to look back and see how correct they are in general, but to be practically useful it would have to be quite a lot better than chance.
guru4consulting 3y ago
Agreed. Stock markets are very similar to prediction markets. They are priced based on future projections, technical feasibility and probability of achieving certain milestone, ability to reach market first, internal and external factors, etc. I don't see much difference between a prediction market and a stock market. Theoretically, we could allow both of them and treat them similar. But one major risk I see is that big players can influence it with big money and distort the reality. It becomes a casino, just like the current wall street. Right now, most of the participants in prediction markets are likely knowledgeable in the subject area, or even subject matter experts and it's probably better to leave it that way.
- KingOfCoders 3y ago
  "attempt to have the process replicated and buy options on the outcome once they confirm their findings in" This is called insider trading in stock markets and illegal. So your analogy breaks.
  - junofan 3y ago
    If some company claims to have discovered a way to make widget X and I make widget X at home and trade on that information, that’s completely legal.
  - alchemist1e9 3y ago
    fwiw there are very coherent economic arguments as to why insider trading should not be illegal and might be more “fair” with it permitted.
gomox 3y ago
Re: nuclear weapon detonation, the implied probability of 9% (I take it source is: https://polymarket.com/event/will-a-nuclear-weapon-detonate-by https://polymarket.com/event/will-a-nuclear-weapon-detonate-...) might be factoring in the premium for the insurance that participants that predict a detonation are interested in acquiring. Let's say that the real odds of detonation are 1% and that everyone participating in the market knows and agrees to this. You would expect the implied probability that the market produces to be 1%. But in practice, a nuclear detonation would be a highly disruptive event where the impact is hard to assess. This creates an asymmetry of interests. If you want to protect yourself financially from such an event, you would pay a premium for it (which in a prediction market implies placing a higher bet on "detonation will happen" than a perfect gambler). If you want to protect yourself from the event _not_ happening, you would also do the same, but no one really does that other than speculators. Similarly, you can sell tornado insurance to a lot of people, but very few people are interested in insuring that a tornado _will_ happen (maybe concrete bunker architect studios?). So the underlying prediction market would skew towards overestimating the likelihood of tornados.
- epivosism 3y ago
  "Will a nuclear weapon be detonated (including tests and accidents) in 2023?" is at 18% https://manifold.markets/ACXBot/8-will-a-nuclear-weapon-be-detonate https://manifold.markets/ACXBot/8-will-a-nuclear-weapon-be-d... There are some caveats in the description, and this is play money, but people on the site do take their profits seriously.
  - gomox 3y ago
    It seems to be too thinly traded to read much into it? From what I can see a $100 bet would make the implied probability of detonation 93%.
    - epivosism 3y ago
      yes, but then players would use their cash to bring it back to a reasonable number. That's why there are temporary blips on the site but markets which have at least 40-50 traders tend to stay where the whale consensus still is. I admit it's a weakness, but even play money markets generally do tend to track real-money ones where they exist. People on the site mostly take their profits seriously.
sterlind 3y ago
> Is it fascinating the risk of a nuclear weapon detonation by December 31st of 2023 is accessed to be around 9%? If a nuke goes off, full-scale nuclear war becomes much more likely. In the event of nuclear apocalypse, your money will become worthless. So shouldn't that risk be undervalued?
deleted 3y ago
[deleted]
andrepd 3y ago
>Is it fascinating the risk of a nuclear weapon detonation by December 31st of 2023 is accessed to be around 9%? That tells you all you need to know, but probably not in the way you think.

mellosouls 3y ago

There is always a subtle anti-markets theme on many HN debates, likely from highly educated ans literate posters. I believe we still in this age simply don’t provide proper education on the massive benefits that markets bring to so mang problems I think we are all too aware of markets and their benefits and disbenefits. It's not clear why you think the "education" is missing only in one direction.

alchemist1e9 3y ago
You don’t observe a frequent knee jerk like anti-markets reaction from comments across HN? What are good examples of their “disbenefits”?
- mellosouls 3y ago
  You don’t observe a frequent knee jerk like anti-markets reaction from comments across HN? I find HN one of the most balanced online forums on most subjects. What are good examples of their “disbenefits”? The race to the bottom is all around us.
  - alchemist1e9 3y ago
    > The race to the bottom is all around us. You live in SF by chance? Because globally and historically that’s absolutely not what the data says about markets.
    - RedCondor 3y ago
      Marketers take a lot of credit for achievements that don't belong to them. Take, for example, Hayek's rather more honest commentary on vacations and human rights generally: >[The 1948 Universal Declaration of Human Rights] is admittedly an attempt to fuse the rights of the Western liberal tradition with the altogether different concept deriving from the Marxist Russian Revolution. It adds to the list of the classical civil rights enumerated in its first twenty-one articles seven further guarantees intended to express the new ‘social and economic rights’. (…) The conception of a ‘universal right’ which assures to the peasant, to the Eskimo, and presumably to the Abominable Snowman, ‘periodic holidays with pay’ shows the absurdity of the whole thing. (…) What are the consequences of the requirement that every one should have the right ‘freely to participate in the cultural life of the community and to share in the scientific advances and its benefits’. (…) It is evident that all these ‘rights’ are based on the interpretation of society as a deliberately made organization by which everybody is employed. They could not be made universal within a system of rules of just conduct based on the conception of individual responsibility, and so require that the whole of society be converted into a single organization, that is, made totalitarian in the fullest sense of the word. https://redsails.org/concessions/ https://redsails.org/concessions/ The decay we witness today is simply the rollback of concessions copied from socialist states and artificially bolted onto capitalism to reduce socialist ferment. The consequences are predictable.
      - alchemist1e9 3y ago
        I see. So this is about “the right” to take a vacation? What are you talking about and what am I? we seem to live in different realities. I can’t even imagine somehow I would have a government “right” to take a vacation. Who is paying for it? I don’t get it.
- Bluestrike2 3y ago
  Any number of the many, many, negative externalities[0], where market transactions are unable or unwilling to capture the often serious negative effects of an activity in its price, that have been documented and researched by economists over the years? Air pollution and greenhouse gases are just two of the biggest examples, with absolutely massive external costs that are not captured in the price. There are even positive externalities with various activities where societal benefits can't be captured in the price. Regulatory capture[1] and rent-seeking are also examples where markets can fail. There are plenty of others. Markets are just tools for the exchange of economic activity. Nothing more, nothing less. But as a society, we tend to ascribe all sorts of greater meaning to them that make it harder to recognize where they come up short and actually do something about it. If knee-jerk anti-market reactions are bad, then might I propose that knee-jerk pro-market reactions are just as bad, insofar as they gloss over or outright ignore the negative aspects of markets as we've implemented them? Imagine a screwdriver. It does one job: turn a screw. If you have the right one, matched with the corresponding screw drive--let's just assume a Philips screw--at the right size, it does its job perfectly. But it'll get less effective as the tip and screw sizes diverge. What about other screw drives? There are a bunch of types where a Philips will sort of fit, and you'll probably be able to turn the screw, albeit with more effort and a greater likelihood of camming out and damaging the screw or your screwdriver. A flat-head screwdriver gets used and abused in all sorts of fun and interesting ways. You can use a flat-head screwdriver to pry open a can of paint, but an actual paint can opener is still less likely to distort or damage the lid or slip and injure you. At some point, you open the tool box and grab another tool. Maybe it's another screwdriver, because you're turning another screw. Or maybe it's a different tool altogether, one designed for the specific task at hand. Markets aren't so different, if not quite as narrowly-defined as a screwdriver. They work well in some areas, less well in others, and in some, they simply can't function. All to varying degrees. Recognizing their failures and limitations allows us try and develop policies that address their worst parts while maintaining their more desirable parts. 0. https://en.wikipedia.org/wiki/Externality https://en.wikipedia.org/wiki/Externality 1. https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture
  - alchemist1e9 3y ago
    For the record I believe I agree with you. However I view it as governments are the failure point in the issues you list, not markets. They have outright failed to address the negative externalities as they have been captured by private interests. In my opinion the entire financial system is captured and the regulations they tend to introduce are simply to allow the corrupt private entities further control. One neat part of anonymous online prediction markets using unregulated digital currencies is how they exist outside this crony capitalist system. It’s not markets to blame. It’s bad government!
- kybernetikos 3y ago
  I would describe myself as cautiously pro market, but I think it's hard to deny that they are effective externality seeking machines. If there is any way of providing a benefit while finding a way to impose the cost diffusely, you can bet that the market will find it. Market based systems guarantee that costs will be hidden and imposed on those who don't receive the benefit to the maximum extent possible given physics and law. On top of that, it's interesting that we only use the market concept at the meta level. Vanishingly few of the businesses that compete in the marketplace are internally arranged on market principles. Instead they follow bureaucratic and oligarchic principles internally. And when the survival of the state is on the line because of war, we don't trust markets to allocate resources to get important things built quickly - rather the state takes power to directly cause some things to be built and other things not to be. Although the market gets praised for being good at allocation of capital, I would say it's good in the way evolution is good at finding things that can survive. It might find great solutions that a planned process wouldn't, but it'll take a long time and a lot of things will die in the process.
  - nvm0n1 3y ago
    Isn't military work mostly done by private contractors? It's not like the USAF actually owns and operates its own plane factories. Some companies do approximate market operations internally, any company that has a notion of internal billing or where teams talk about internal customers is to some extent like this. Companies not using market principles internally isn't a strike against markets, if you believe Coase's theory of the firm i.e. companies form at the break even point on transaction costs
- ajuc 3y ago
  Child labor. Slave trade. Sweatshops. 1000 different environmental catastrophes. You know, the reasons we have regulation. We had markets FIRST, then we got regulation on top of that, and we never looked back.
  - Turing_Machine 3y ago
    All of those things, including environmental catastrophes, existed for millennia before Adam Smith came along.
    - ajuc 3y ago
      So did markets.
  - alchemist1e9 3y ago
    Absolutely government’s fundamental role in human society is regulating against harm. But somehow the narrative is markets are “bad”, they obviously aren’t as they seek out information and efficiency, which is a good thing. Markets are the one’s you should thank for telling you child labor, slaves, and sweatshops are a problem, and the environment issue, so you pressured your government to regulate those issues. Without free markets the alternative would be the government doing all those horrible things, which btw they certain used to. People are mixed up, the primary problem is government failure to regulate and be transparent. It’s very difficult for governments to admit they create the problems so academics and politicians find the boggy man of markets. Kennedy understands this topic well and while it’s unlikely he will win, I deeply hope he can somehow. We need more markets for more things with clear and clean regulations build based on empirical evidence and scientific and not created by lobbyists involved in regulatory capture.
    - ajuc 3y ago
      > But somehow the narrative is markets are “bad” The mainstream opinion is "markets are ok as long as they are well regulated". The only narrative that is trying to compete with that with any success is "markets are perfect without any regulation". Which provokes the rebuttal you refer to. I've yet to see anybody claiming seriously that "markets are inherently bad and can't be saved". Even in communism there were markets, as abysmal as that system was (and I lived in a communist country for 6 years). If our markets right now were regulated enough - we wouldn't have global warming problems. Clearly there's a lot of externalities that aren't priced-in. So - there's too much market and too little regulation.
- eropple 3y ago
  > What are good examples of their “disbenefits”? Overwhelmingly unaddressed externalities.
  - sterlind 3y ago
    Prediction markets seem blessedly free of externalities though, compared to, say, the energy market (CO2) or textiles (child labor, sweatshops.) except for incentivizing action to tilt the odds, which is weirdly amoral. if you bet on a bad thing happening, you can cash in by making it happen yourself.
    - Regnore 3y ago
      Feeding gambling addictions is the one big externality that comes to mind.
    - someplaceguy 3y ago
      > except for incentivizing action to tilt the odds, which is weirdly amoral. It depends on what's at stake. One example is predicting someone's death. > if you bet on a bad thing happening, you can cash in by making it happen yourself. Yes, and that could be a huge problem, don't you think? It creates an incentive for a bad thing happening that wouldn't exist otherwise. I say this as someone who is in huge favor of markets but also hates their externalities.
- kakwa_ 3y ago
  Vast topic. Markets definitely have their issues. Here are a few: * The most obvious one is the fact it's an overhead, it doesn't produce goods or services by itself. That's not a major issue, but for example in the US ~5% (~7M of ~150M) of the workforce is dedicated to this overhead. * It's prone to internal instabilities. Too often, the markets disconnect from the underlying economic reality, sometimes with only mild effects (for example, that time petroleum prices went negative), sometimes with more serious ones (2008). * It can lead to overly quantitative views, ignoring the qualitative. It's the "metrics becoming the objective and thus compromising the value of the metric" (example: tech stock prices). * It over-emphasizes individual interests over the collective one (think for example: environmental issues & global warming). Markets definitely have their issues. But so far, the other systems we experimented with (planned economy) were even less able to cope with the incredibly difficult task of balancing an economy. Lastly, it is to be noted that we are not operating in a pure market economy. We are in an hybrid system where States (hopefully representing their people) definitely have a lot of say in economic matters and that's probably for the better.
  - mschuster91 3y ago
    > Markets definitely have their issues. But so far, the other systems we experimented with (planned economy) were even less able to cope with the incredibly difficult task of balancing an economy. The worst issue that the Soviets and other attempts at central planning failed to account for was flexibility and buffer. Say a natural disaster hits and you need an extra amount of concrete for reconstruction, but all the concrete production was already allocated for something else and the plan is considered sacrosanct. Or some innovation (e.g. refrigerators, cars, washing machines) proves to be way more popular than expected, but there is no way to adapt the plan, and so you had to wait years for a Trabant car. Ironically, Western-style "free markets" eventually converged towards the same issue with the unholy invention of "just in time" manufacturing. Both capitalism and communism sought to eradicate "inefficiencies" and destabilized their entire foundation doing so.
    - kakwa_ 3y ago
      To extend, interesting read on the subject of the soviet economy: https://chris-said.io/2016/05/11/optimizing-things-in-the-ussr/ https://chris-said.io/2016/05/11/optimizing-things-in-the-us... HN discussions: https://news.ycombinator.com/item?id=14515225 https://news.ycombinator.com/item?id=14515225 https://news.ycombinator.com/item?id=25084479 https://news.ycombinator.com/item?id=25084479
- andrepd 3y ago
  >What are good examples of their “disbenefits”? The fact that you are asking this with a straight face tells me everything I need to know. Even the most rabidly capitalist person recognises that there are many severe problems with capitalism (they usually argue that it's simply better than the alternatives).

croes 3y ago

Because markets aren't nearly as clever as is always claimed. Lehmann Brothers anyone?

alchemist1e9 3y ago
More like governments aren’t as clever as claimed. The markets would have put all the bad actors out of business permanently and redistributed the resources (like shinny new buildings and engineers) to areas where they would better be utilized. Instead it was turned into an opportunity to launder money at planetary scale. This likely hints to why the truth about the benefits of brutally efficient free markets is distorted in education, it would require the teaching of the remarkable incompetence of collectivism and governments! which we know who won’t like that.
- cmilton 3y ago
  At what cost though? Surely the wealthy will continue on like nothing ever happened while the rest of us are here holding the bag. Markets seem to benefit some much more than others. Not everyone wants to play this game.
  - alchemist1e9 3y ago
    I was there and know all the details what happened and you nailed the key point, they used fear to have you believe what you wrote. I remember Paulson talking about how ATMs would fail. AIG won’t pay it’s policies. The US equities would crash even further. I hate to tell you but ALL lies, blatant “misinformation” as the new term is. They needed you to be terrified to save their own skins. Blackrock became the largest landlord in the country afterwards. The very companies that facilitated and promoted and literally caused the bubble and crash were rewarded. The waitress and mechanic couple with a baby who had carefully saved up $30K never got the opportunity to buy that house down the street from their parents for $90K at foreclosure from the bankrupt banks. Nope, Blackrock exchanged their bad paper, worth, 20c for $1 to your very government for new fresh cash, bought it instead at $120K, down from $150K. Go crony capitalism! Which isn’t what markets are about.

morelisp 3y ago

Looking past your "rah rah financialization" partisanship, one question: Why is a prediction market for replication per se more interesting than the existing market of all the public companies who would be enriched / wiped out based on the result? (Note that "well, the effect would be too small" flips just as easily around to, the smaller markets are obviously way too noisy given what people are actually getting away with...)

alchemist1e9 3y ago
What are people getting away with exactly? Prediction markets more rapidly expose fraud and misinformation than without them. Generally the decision to list a market or contract is based on providing specific utility and information. They provide a better signal to noise and therefore provide risk management as well. The fact you believe markets are a “partisan” topic illustrates exactly the problem. They are objectively and scientifically an important and critical part of humanity, which isn’t taught. As I’ve said elsewhere there reason is obvious as in teaching such facts and information will require simultaneously teach about how horrific and harmful governments have been, and we know who won’t like that.
- morelisp 3y ago
  Exposing fraud you created the environment for is not particularly interesting.
  - alchemist1e9 3y ago
    Oh so fraudulent SC claims would have no better avenues without prediction markets? I’d argue they would have more and with more capacity not less!
  - jamilton 3y ago
    I don't understand, how do prediction markets create the environment for fraud?
concordDance 3y ago

tomjen3 3y ago

Prediction markets got Donald Trump wrong on the election night and Brexit too[0]. Given such a huge failure why should we care what they say? [0]: https://archive.li/7m8s6 https://archive.li/7m8s6

bitshiftfaced 3y ago
Weren't they still much better than what many media experts were forecasting? Iirc, CNN put Clinton at 97%.
- andrepd 3y ago
  Serious analysis, like 538 (not just poll aggregators like CNN), put Clinton at ~65%.
brookst 3y ago
Are you saying they are no better than chance? Or just that they are not 100% perfect? Because we should deeply care about any source of information that beats chance, even if it is imperfect.
- tomjen3 3y ago
  I mean that is two fucking big ones to get wrong, no? Would maybe be interesting to see some data to look back and see how correct they are in general, but to be practically useful it would have to be quite a lot better than chance.

guru4consulting 3y ago

Agreed. Stock markets are very similar to prediction markets. They are priced based on future projections, technical feasibility and probability of achieving certain milestone, ability to reach market first, internal and external factors, etc. I don't see much difference between a prediction market and a stock market. Theoretically, we could allow both of them and treat them similar. But one major risk I see is that big players can influence it with big money and distort the reality. It becomes a casino, just like the current wall street. Right now, most of the participants in prediction markets are likely knowledgeable in the subject area, or even subject matter experts and it's probably better to leave it that way.

KingOfCoders 3y ago
"attempt to have the process replicated and buy options on the outcome once they confirm their findings in" This is called insider trading in stock markets and illegal. So your analogy breaks.
- junofan 3y ago
  If some company claims to have discovered a way to make widget X and I make widget X at home and trade on that information, that’s completely legal.
- alchemist1e9 3y ago
  fwiw there are very coherent economic arguments as to why insider trading should not be illegal and might be more “fair” with it permitted.

gomox 3y ago

Re: nuclear weapon detonation, the implied probability of 9% (I take it source is: https://polymarket.com/event/will-a-nuclear-weapon-detonate-by https://polymarket.com/event/will-a-nuclear-weapon-detonate-...) might be factoring in the premium for the insurance that participants that predict a detonation are interested in acquiring. Let's say that the real odds of detonation are 1% and that everyone participating in the market knows and agrees to this. You would expect the implied probability that the market produces to be 1%. But in practice, a nuclear detonation would be a highly disruptive event where the impact is hard to assess. This creates an asymmetry of interests. If you want to protect yourself financially from such an event, you would pay a premium for it (which in a prediction market implies placing a higher bet on "detonation will happen" than a perfect gambler). If you want to protect yourself from the event _not_ happening, you would also do the same, but no one really does that other than speculators. Similarly, you can sell tornado insurance to a lot of people, but very few people are interested in insuring that a tornado _will_ happen (maybe concrete bunker architect studios?). So the underlying prediction market would skew towards overestimating the likelihood of tornados.

epivosism 3y ago
"Will a nuclear weapon be detonated (including tests and accidents) in 2023?" is at 18% https://manifold.markets/ACXBot/8-will-a-nuclear-weapon-be-detonate https://manifold.markets/ACXBot/8-will-a-nuclear-weapon-be-d... There are some caveats in the description, and this is play money, but people on the site do take their profits seriously.
- gomox 3y ago
  It seems to be too thinly traded to read much into it? From what I can see a $100 bet would make the implied probability of detonation 93%.
  - epivosism 3y ago
    yes, but then players would use their cash to bring it back to a reasonable number. That's why there are temporary blips on the site but markets which have at least 40-50 traders tend to stay where the whale consensus still is. I admit it's a weakness, but even play money markets generally do tend to track real-money ones where they exist. People on the site mostly take their profits seriously.

sterlind 3y ago

> Is it fascinating the risk of a nuclear weapon detonation by December 31st of 2023 is accessed to be around 9%? If a nuke goes off, full-scale nuclear war becomes much more likely. In the event of nuclear apocalypse, your money will become worthless. So shouldn't that risk be undervalued?

deleted 3y ago

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andrepd 3y ago

>Is it fascinating the risk of a nuclear weapon detonation by December 31st of 2023 is accessed to be around 9%? That tells you all you need to know, but probably not in the way you think.