5 ms·

Using insider information is how you are supposed to win these. Otherwise it's just random gambling. This is not the stock market. There are no public reportin

Using insider information is how you are supposed to win these. Otherwise it's just random gambling. This is not the stock market. There are no public reporting rules for the weather, song lyrics, what Kim Kardashian eats tomorrow.

kqr 9mo ago
Well, better synthesis of public information is also a way to win. Some people think of that as more fair. Another way to win is to use them for hedging exposure elsewhere. That also doesn't require inside information.
- randyrand 9mo ago
  We are all in the same world. Go find the information you need to make informed choices. Betting on the weather? Go build weather stations. Betting on Kim Kardashian? Go interview her. This "go find valuable information" approach is broadly applicable to making money.
  - undeveloper 9mo ago
    pro insider trading is an odd position to defend
    - randyrand 9mo ago
      No need to limit yourself to "trading". You can use this approach to buy real estate, build products, companies. This private info is often even considered "trade secret", which is protected against being stolen and spread.
- bjackman 9mo ago
  Why should we want prediction markets to be fair? I want them to reveal facts about the world. They only need to be fair inasmuch as it serves that goal. I don't think it wouldn serve that goal to forbid insider trading? (Why do we forbid insider trading in the stock market? Not because it's unfair. Because it makes the market worse at doing what we want it to do, which is funding the most productive enterprises).
  - tlb 9mo ago
    Given that inside information makes prediction markets more accurate, why do you believe it doesn't make stock markets more accurate? If, say, Enron insiders could've shorted their own stock, that would have improved accuracy and thereby diverted more funding to more productive enterprises. I guess there could be second-order effects when insiders can actually change the outcome, which is why athletes aren't allowed to bet on their own games.
    - thaumasiotes 9mo ago
      > Given that inside information makes prediction markets more accurate, why do you believe it doesn't make stock markets more accurate? He didn't say that it doesn't. It obviously does make stock markets more accurate. But it tends to drive down the total amount of money available to be invested in stocks, which is compatible with the claim that it makes the market worse at funding productive enterprises.
      - JasonADrury 9mo ago
        > But it tends to drive down the total amount of money available to be invested in stocks That seems like a big claim. For most market participants, there's always a counterparty that's so much more sophisticated that it doesn't make a difference if they're an insider or not.
      - bjackman 9mo ago
        Yeah exactly. Allowing insider trading makes adverse selection too high.
    - lxgr 9mo ago
      > I guess there could be second-order effects when insiders can actually change the outcome You don't need to guess. That's exactly why it's illegal: It creates bad incentives, similarly to e.g. taking out a life insurance policy on a random person you have no financial dependence on.
      - 9mo ago
lxgr 9mo ago
> Using insider information is how you are supposed to win these. Otherwise it's just random gambling. Not nearly. If nothing else, there's still time arbitrage and at least some amount of information processing required. Even efficient markets need somebody doing the leg work and making them so, especially when unsophisticated traders are participating too.
deleted 9mo ago
[deleted]
numtel 9mo ago
Getting close to Jim Bell's assassination politics https://news.ycombinator.com/item?id=32790951 https://news.ycombinator.com/item?id=32790951
_DeadFred_ 9mo ago
How have we regressed to the point of forgetting that you don't let athletes and referees gamble?

kqr 9mo ago

Well, better synthesis of public information is also a way to win. Some people think of that as more fair. Another way to win is to use them for hedging exposure elsewhere. That also doesn't require inside information.

randyrand 9mo ago
We are all in the same world. Go find the information you need to make informed choices. Betting on the weather? Go build weather stations. Betting on Kim Kardashian? Go interview her. This "go find valuable information" approach is broadly applicable to making money.
- undeveloper 9mo ago
  pro insider trading is an odd position to defend
  - randyrand 9mo ago
    No need to limit yourself to "trading". You can use this approach to buy real estate, build products, companies. This private info is often even considered "trade secret", which is protected against being stolen and spread.
bjackman 9mo ago
Why should we want prediction markets to be fair? I want them to reveal facts about the world. They only need to be fair inasmuch as it serves that goal. I don't think it wouldn serve that goal to forbid insider trading? (Why do we forbid insider trading in the stock market? Not because it's unfair. Because it makes the market worse at doing what we want it to do, which is funding the most productive enterprises).
- tlb 9mo ago
  Given that inside information makes prediction markets more accurate, why do you believe it doesn't make stock markets more accurate? If, say, Enron insiders could've shorted their own stock, that would have improved accuracy and thereby diverted more funding to more productive enterprises. I guess there could be second-order effects when insiders can actually change the outcome, which is why athletes aren't allowed to bet on their own games.
  - thaumasiotes 9mo ago
    > Given that inside information makes prediction markets more accurate, why do you believe it doesn't make stock markets more accurate? He didn't say that it doesn't. It obviously does make stock markets more accurate. But it tends to drive down the total amount of money available to be invested in stocks, which is compatible with the claim that it makes the market worse at funding productive enterprises.
    - JasonADrury 9mo ago
      > But it tends to drive down the total amount of money available to be invested in stocks That seems like a big claim. For most market participants, there's always a counterparty that's so much more sophisticated that it doesn't make a difference if they're an insider or not.
    - bjackman 9mo ago
      Yeah exactly. Allowing insider trading makes adverse selection too high.
  - lxgr 9mo ago
    > I guess there could be second-order effects when insiders can actually change the outcome You don't need to guess. That's exactly why it's illegal: It creates bad incentives, similarly to e.g. taking out a life insurance policy on a random person you have no financial dependence on.
    - 9mo ago

lxgr 9mo ago

> Using insider information is how you are supposed to win these. Otherwise it's just random gambling. Not nearly. If nothing else, there's still time arbitrage and at least some amount of information processing required. Even efficient markets need somebody doing the leg work and making them so, especially when unsophisticated traders are participating too.

deleted 9mo ago

[deleted]

numtel 9mo ago

Getting close to Jim Bell's assassination politics https://news.ycombinator.com/item?id=32790951 https://news.ycombinator.com/item?id=32790951

_DeadFred_ 9mo ago

How have we regressed to the point of forgetting that you don't let athletes and referees gamble?