The magic of a prediction market with a reasonable sampling of people is that the players don't need to be rational, for things that are publicly decided. Imagi

The magic of a prediction market with a reasonable sampling of people is that the players don't need to be rational, for things that are publicly decided. Imagine every person who went to vote, also bet in a prediction market based on nothing except who they wanted to win - the prediction market would be right 100% of the time. And it'd similarly be right most of the time, with a good random sample. That said, even for things that aren't publicly decided - the 'wisdom of the masses' [1] is very real and kind of weird phenomena. If you get people to try to guess how many beans are in a large jar, you'll get some people making really stupid guesses like 100, or a million. Yet when you average out the result over all answers, it tends to be extremely close to the right answer. At least unless you let people collaborate, then the effect disappears and we become stupid again. Kind of explains a lot of things. [1] - https://en.wikipedia.org/wiki/Wisdom_of_the_crowd#Examples https://en.wikipedia.org/wiki/Wisdom_of_the_crowd#Examples