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The article briefly mentions causes for market inefficiency such as the time value of money and platform fees, but then inexplicably goes on to ignore them as p
by ummonk 3y ago
The article briefly mentions causes for market inefficiency such as the time value of money and platform fees, but then inexplicably goes on to ignore them as potential reasons for inefficient markets.
Plenty of arbitrage opportunities exist on PredictIt that can’t be taken advantage of either because the platform’s cut of any profit you make on a bet will negate the arbitrage or because resolution is so far off that it would be more profitable to just invest in a CD.
- tshaddox 3y agoI would expect that platform risk would be even more significant than fees and time. I haven't looked into any of the popular prediction market platforms, but by default I would be more concerned about the risk of them resolving markets in ways I fundamentally disagree with or simply ceasing to exist.
- caf 3y agoThat is not how I read it at all. To me, it reads as "there are likely many reasons these markets aren't operating efficiently". The time value of money and fees certainly are part of it, but they don't explain things like, for example, the weight of money in the Trump-by-280+-EV contract.
- ummonk 3y agoThe point (which the author misses) is that irrational actors (such as those putting money in Trump winning by 280+) wouldn't significantly distort market odds if the market weren't severely crippled by so many restrictions and fees.