5 ms·

If I'm an insider with 100% confidence, I'll take all offers at a certain price as long as I can afford it. Similar story for lower levels of confidence (but s

by 0x3f 8mo ago

If I'm an insider with 100% confidence, I'll take all offers at a certain price as long as I can afford it. Similar story for lower levels of confidence (but still inside info). There won't necessarily be any left for you to copy at a viable price.

chii 8mo ago
> Similar story for lower levels of confidence therefore, the polymarket betting odds will reflect the truth - even if that info is a secret that nobody else but the insider knows. And if this is the case, then even an outsider could make use of the odds as a source of info which would ensure that market efficiency (which is about the flow of information) is high. So what's wrong with insider trading again?
- wqaatwt 8mo ago
  That someone with inside information will e.g. make 500% while those late to the party e.g. only get 10%? (of course your example is not very realistic to begin with)
  - nubg 8mo ago
    So is any kind of business illegal? Making investments?
- mminer237 8mo ago
  It rewards blatant corruption? What's the benefit is the bigger question.
  - 0x3f 8mo ago
    The benefit is that inside information becomes public information. The reward for the insider is just the necessary incentive for that to happen.
    - a2128 8mo ago
      Has there ever been any documented circumstance where significant inside information became public and known thanks to a trade? Most often, the trade is made at the last minute, and the information gets subsequently revealed anyway. And it's impossible to tell whether somebody is an inside trader, a wealthy gambling addict making a stupid decision, or hypothetically a foreign agent pretending to be an inside trader to make people believe in a particular outcome.
      - 0x3f 8mo ago
        It's impossible to know anything for certain; almost everything is probabilistic. Also I'm not sure how to interpret your criteria because timing matters, I don't think saying 'it gets revealed in the end' is very meaningful. Anyway, on Polymarket specifically, sure, military strikes are a common one. Seems like a useful signal to go hide in the basement. Outside Polymarket, there were insider trades in 2008 that I'm sure were useful.
- yowayb 8mo ago
  How is this distinguishable from pump-dump?
- hibikir 8mo ago
  The issue comes from situations where the insiders can alter the answer to help their own bets. The simple example is the bet on how long a press conference will be: It's a ridiculous bet when the person giving said press conference can bet and fleece the market. Will X country invade another before or after day X? A large enough market changes the answer, as the agent can change the decision. And we can see this kind of thing in many interesting questions.
  - 0x3f 8mo ago
    These are not secret divinations though, the participants know this and price it in or otherwise allow it to determine which markets they participate in.
- MrMan 8mo ago
  [dead]
- a2128 8mo ago
  If you believe Polymarket as a serious source of truth, consider that somebody manipulated "Will Jesus Christ return before 2027?" because there was a secondary market on whether that market will rise above 5%. Which defeats the whole idea that the betting odds will reflect the truth. Also even pre-manipulation I don't think a 2% chance that Jesus will return was reflective of truth. https://gizmodo.com/checking-in-on-polymarket-bets-on-christs-return-jump-on-bets-that-bets-on-christs-return-will-jump-2000720298 https://gizmodo.com/checking-in-on-polymarket-bets-on-christ...
jwpapi 8mo ago
The examples didn’t look like they’ve completely emptied the orderbook
- 0x3f 8mo ago
  Because there's always some uncertainty and capital limits. But the uncertainty about the outcome is itself inside info, and that's compounded with your own uncertainty about the insider as a copy trader. So the insider will empty out certain price levels only, and your certainty is strictly less than theirs, meaning you have even fewer viable levels to buy.
slashdev 8mo ago
You might not have enough money to drain the order book. And there's always a chance things go wrong, even with inside information. It would be unwise to go all in.

by 0x3f 8mo ago

chii 8mo ago

> Similar story for lower levels of confidence therefore, the polymarket betting odds will reflect the truth - even if that info is a secret that nobody else but the insider knows. And if this is the case, then even an outsider could make use of the odds as a source of info which would ensure that market efficiency (which is about the flow of information) is high. So what's wrong with insider trading again?

wqaatwt 8mo ago
That someone with inside information will e.g. make 500% while those late to the party e.g. only get 10%? (of course your example is not very realistic to begin with)
- nubg 8mo ago
  So is any kind of business illegal? Making investments?
mminer237 8mo ago
It rewards blatant corruption? What's the benefit is the bigger question.
- 0x3f 8mo ago
  The benefit is that inside information becomes public information. The reward for the insider is just the necessary incentive for that to happen.
  - a2128 8mo ago
    Has there ever been any documented circumstance where significant inside information became public and known thanks to a trade? Most often, the trade is made at the last minute, and the information gets subsequently revealed anyway. And it's impossible to tell whether somebody is an inside trader, a wealthy gambling addict making a stupid decision, or hypothetically a foreign agent pretending to be an inside trader to make people believe in a particular outcome.
    - 0x3f 8mo ago
      It's impossible to know anything for certain; almost everything is probabilistic. Also I'm not sure how to interpret your criteria because timing matters, I don't think saying 'it gets revealed in the end' is very meaningful. Anyway, on Polymarket specifically, sure, military strikes are a common one. Seems like a useful signal to go hide in the basement. Outside Polymarket, there were insider trades in 2008 that I'm sure were useful.
yowayb 8mo ago
How is this distinguishable from pump-dump?
hibikir 8mo ago
The issue comes from situations where the insiders can alter the answer to help their own bets. The simple example is the bet on how long a press conference will be: It's a ridiculous bet when the person giving said press conference can bet and fleece the market. Will X country invade another before or after day X? A large enough market changes the answer, as the agent can change the decision. And we can see this kind of thing in many interesting questions.
- 0x3f 8mo ago
  These are not secret divinations though, the participants know this and price it in or otherwise allow it to determine which markets they participate in.
MrMan 8mo ago
[dead]
a2128 8mo ago
If you believe Polymarket as a serious source of truth, consider that somebody manipulated "Will Jesus Christ return before 2027?" because there was a secondary market on whether that market will rise above 5%. Which defeats the whole idea that the betting odds will reflect the truth. Also even pre-manipulation I don't think a 2% chance that Jesus will return was reflective of truth. https://gizmodo.com/checking-in-on-polymarket-bets-on-christs-return-jump-on-bets-that-bets-on-christs-return-will-jump-2000720298 https://gizmodo.com/checking-in-on-polymarket-bets-on-christ...

jwpapi 8mo ago

The examples didn’t look like they’ve completely emptied the orderbook

0x3f 8mo ago
Because there's always some uncertainty and capital limits. But the uncertainty about the outcome is itself inside info, and that's compounded with your own uncertainty about the insider as a copy trader. So the insider will empty out certain price levels only, and your certainty is strictly less than theirs, meaning you have even fewer viable levels to buy.

slashdev 8mo ago

You might not have enough money to drain the order book. And there's always a chance things go wrong, even with inside information. It would be unwise to go all in.