4 ms·

Insider trading is the raison d'etre of these products.

by gtowey 8mo ago

Hamuko 8mo ago
Yeah, Polymarket is explicitly advertising this. >Research shows prediction markets are often more accurate than experts, polls, and pundits. Traders aggregate news, polls, and expert opinions, making informed trades. Their economic incentives ensure market prices adjust to reflect true odds as more knowledgeable participants join. >If you’re an expert on a certain topic, Polymarket is your opportunity to profit from trading based on your knowledge, while improving the market’s accuracy. You know what's a great knowledgeable participant? An insider.
- gtowey 8mo ago
  I have come to the opinion that every successful tech company is basically just an arbitrage scheme to avoid regulations and extract value based on that advantage. Airbnb for unlicensed hotels. Uber for unlicensed taxis. Amazon for whitewashing fraudulent products. Bitcoin for unlicensed securities and laundering money. The pattern is upsetting.
  - logicchains 8mo ago
    From an economic perspective the majority of those regulations destroy economic value and those companies are unlocking value by finding clever ways around them.
    - gtowey 8mo ago
      No, they just shift the economic downsides to someone else so they can collect the difference. That's what I mean by arbitrage. Someone always pays the price, and now it's you and I.
      - Imustaskforhelp 8mo ago
        I agree, once they have bypassed regulations, they use that to essentially rent-seek from their monopoly/their unique position where the rent is paid by us public. Their behaviour is very rent-seeking imo and at moments like these, its best to remind us that even the father of Capitalism, Adam Smith didn't like landlords Had to search up some quotes from adam smith right now but here's a relevant one (imo) to this discussion: "[the landlord leaves the worker] with the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him any more." - Adam smith
      - holmesworcester 8mo ago
        That's not always true. Regulations increase the cost of transacting and make ranges of transactions non-viable, just like a tax. So there is "dead weight loss", where transactions that would have been mutually beneficially and socially productive are eliminated by the regulation, and restored when somebody finds a loophole, restoring the individual and social benefit. The world is not zero sum!
    - Imustaskforhelp 8mo ago
      I can't say this for the companies listed above but atleast within the realm of social media, they also want to bypass regulations and well, we all know how's it going. On a long term, I do feel like there will be a drop in producitivity, thus destruction of economic value because of lack of enforcement of policies/such companies having reckless attitude about them. Many of the products listed above actually seem to be very rent-seeking in my opinion (IIRC Someone on HN once said that from their personal experience talking to drivers, uber takes an approximate at the very least 40% cut or more) (This might be a little off-topic?_ but one thing I think about tech regulations is that Facebook used to see if a young girl/minor girl took a selfie and then if they don't upload it, detect that she was insecure and then try to show them face beauty recommendations. These girls can be our sisters/daughters fwiw. Facebook profits from insecurity/rage-bait and I would say that many social medias are the same as well, its just that the facebook example to me feels so eggregious and should be a uniting front for many to agree that there's a problem indeed. You will be right when you say economical value is generated from profiting from insecurity/bypassing regulations but at what cost?
    - Natfan 8mo ago
      i can find clever ways around d crippling debt, its called robbing a bank at gunpoint
  - parineum 8mo ago
    That's what happens when the majority of people don't actually support the regulations. If people thought it was wrong to be an unlicensed airbnb or uber, they wouldn't use them. In reality, those regulations are mostly protection rackets and most people don't care about violating them.
    - lokar 8mo ago
      People were (and mostly still are) very opposed to Airbnb rentals in their neighborhood.
      - aleph_minus_one 8mo ago
        ... but the customers of these Airbnb rentals are not. :-)
        jquery 8mo ago
        People support anti-pollution measures yet corporations still choose to pollute. Curious.
        iso1631 8mo ago
        People whose houses are robbed are against robbery, people who rob houses are very much for it.
        vlovich123 8mo ago
        That’s a false analogy. You have two parties who want to enter into a contract and a third party unrelated to the contract that doesn’t for whatever reason. Just based on contract law and common sense the unrelated party shouldn’t have standing. Now if there’s externalities to the contract that impact that unrelated party sure, but only insofar as to get those externalities addressed. This is not the same as a robbery which involves no contract or a willing counterparty to the robbery.
        8mo ago
  - staplers 8mo ago
    Bitcoin is not a company
- fsckboy 8mo ago
  >Yeah, Polymarket is explicitly advertising this no, they are not. you might have been an insider working on the Apple Newton, and being enthusiastic about it you might have broken the rules and traded on your "knowledge"... and you would have lost your shirt. Same with your very knowledgeable enthusiasm about myriad other technologies. Ever wonder why Wall St doesn't show up at HN asking everybody's opinion about AI in order to leverage that info into billions? an important element of "the wisdom of crowds" is many bits of microknowledge. How many Teslas will be sold next year is very dependent on how much the people who buy Teslas will earn next year (or how secure they will feel in their jobs) working in myriad other industries that have nothing to do with Tesla, along with the price of lithium, tires, and even ... wait for it... gasoline. Polymarket's words you quote can just as likely refer to the wisdom of crowds. Or even, and this is the subtle part: Polymarket's insiders may believe, like you, that they are creating a market to trade on inside information, and yet they, like you, could be made wrong by the superior sum knowledge of the crowd exerting its invisible hands all together to tank your Apple Newtons.
  - pigeons 8mo ago
    >Yeah, Polymarket is explicitly advertising this Yes they are. Polymarket has an ad glorifying a "fictional" scenario where someone gets a job as a janitor in a video game company to bet on related events in polymarket
holmesworcester 8mo ago
Isn't insider trading on a prediction market only wrong to the extent the insider is violating some duty of secrecy to the company? And isn't that just between them and their company in a case-by-case sense? If there was some valuable-to-the-public information that the company did not care about keeping private but just hadn't bothered to make public, for whatever reason, and an insider traded on it on a prediction market, that would only benefit the public's interest in information and would not violate any duty to the company. It'd be a pure win for everyone. It seems unfair to other traders, the way it would be in the stock market, but in prediction markets (unlike the stock market) all participants are explicitly taking on the risk that somebody else might have better access to information than they do. So it's not subverting the system in the way we have decided it does in stock markets. A lot of commenters are getting the wrong take here by looking at this like it's a stock market where there is some society-level interest in giving participants protection from having less information than insiders. It's just a different thing.
- gtowey 8mo ago
  The thing is you're still thinking of these insiders as someone who just got a juicy stock tip from a relative. The much more serious problem is when these insiders actually have their hands on the levers which decide the outcome. It's really no different than a mobster who bets a bunch on money on an unlikely outcome then threatens one side to throw the match. What possible economic benefit is there to society to allow ordinary people to bet in markets like that? Would you really like to live in a world where "Will we nuke Iran?" Is a bet you can make? Then someone in government sees how much money they could make if they bet yes & push the button?
  - tgsovlerkhgsel 8mo ago
    This is the entire idea behind the concept of "assassination markets" - "prediction" markets on assassinations that are just thinly veiled ways to crowdsource murders by taking bets that you expect to lose against an "insider" (the killer).
    - 8mo ago
datsci_est_2015 8mo ago
Could also make a case for incentivizing destructive actions by insiders as well. You’re saying I could sabotage my project and make a quick buck?
- sigmoid10 8mo ago
  That's basically what the current US admin is doing.
ekjhgkejhgk 8mo ago
Excuse me it's called price discovery.

Insider trading is the raison d'etre of these products.

by gtowey 8mo ago

Insider trading is the raison d'etre of these products.

Yeah, Polymarket is explicitly advertising this. >Research shows prediction markets are often more accurate than experts, polls, and pundits. Traders aggregate news, polls, and expert opinions, making informed trades. Their economic incentives ensure market prices adjust to reflect true odds as more knowledgeable participants join. >If you’re an expert on a certain topic, Polymarket is your opportunity to profit from trading based on your knowledge, while improving the market’s accuracy. You know what's a great knowledgeable participant? An insider.

gtowey 8mo ago
I have come to the opinion that every successful tech company is basically just an arbitrage scheme to avoid regulations and extract value based on that advantage. Airbnb for unlicensed hotels. Uber for unlicensed taxis. Amazon for whitewashing fraudulent products. Bitcoin for unlicensed securities and laundering money. The pattern is upsetting.
- logicchains 8mo ago
  From an economic perspective the majority of those regulations destroy economic value and those companies are unlocking value by finding clever ways around them.
  - gtowey 8mo ago
    No, they just shift the economic downsides to someone else so they can collect the difference. That's what I mean by arbitrage. Someone always pays the price, and now it's you and I.
    - Imustaskforhelp 8mo ago
      I agree, once they have bypassed regulations, they use that to essentially rent-seek from their monopoly/their unique position where the rent is paid by us public. Their behaviour is very rent-seeking imo and at moments like these, its best to remind us that even the father of Capitalism, Adam Smith didn't like landlords Had to search up some quotes from adam smith right now but here's a relevant one (imo) to this discussion: "[the landlord leaves the worker] with the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him any more." - Adam smith
    - holmesworcester 8mo ago
      That's not always true. Regulations increase the cost of transacting and make ranges of transactions non-viable, just like a tax. So there is "dead weight loss", where transactions that would have been mutually beneficially and socially productive are eliminated by the regulation, and restored when somebody finds a loophole, restoring the individual and social benefit. The world is not zero sum!
  - Imustaskforhelp 8mo ago
    I can't say this for the companies listed above but atleast within the realm of social media, they also want to bypass regulations and well, we all know how's it going. On a long term, I do feel like there will be a drop in producitivity, thus destruction of economic value because of lack of enforcement of policies/such companies having reckless attitude about them. Many of the products listed above actually seem to be very rent-seeking in my opinion (IIRC Someone on HN once said that from their personal experience talking to drivers, uber takes an approximate at the very least 40% cut or more) (This might be a little off-topic?_ but one thing I think about tech regulations is that Facebook used to see if a young girl/minor girl took a selfie and then if they don't upload it, detect that she was insecure and then try to show them face beauty recommendations. These girls can be our sisters/daughters fwiw. Facebook profits from insecurity/rage-bait and I would say that many social medias are the same as well, its just that the facebook example to me feels so eggregious and should be a uniting front for many to agree that there's a problem indeed. You will be right when you say economical value is generated from profiting from insecurity/bypassing regulations but at what cost?
  - Natfan 8mo ago
    i can find clever ways around d crippling debt, its called robbing a bank at gunpoint
- parineum 8mo ago
  That's what happens when the majority of people don't actually support the regulations. If people thought it was wrong to be an unlicensed airbnb or uber, they wouldn't use them. In reality, those regulations are mostly protection rackets and most people don't care about violating them.
  - lokar 8mo ago
    People were (and mostly still are) very opposed to Airbnb rentals in their neighborhood.
    - aleph_minus_one 8mo ago
      ... but the customers of these Airbnb rentals are not. :-)
      - jquery 8mo ago
        People support anti-pollution measures yet corporations still choose to pollute. Curious.
      - iso1631 8mo ago
        People whose houses are robbed are against robbery, people who rob houses are very much for it.
        vlovich123 8mo ago
        That’s a false analogy. You have two parties who want to enter into a contract and a third party unrelated to the contract that doesn’t for whatever reason. Just based on contract law and common sense the unrelated party shouldn’t have standing. Now if there’s externalities to the contract that impact that unrelated party sure, but only insofar as to get those externalities addressed. This is not the same as a robbery which involves no contract or a willing counterparty to the robbery.
        8mo ago
- staplers 8mo ago
  Bitcoin is not a company
fsckboy 8mo ago
>Yeah, Polymarket is explicitly advertising this no, they are not. you might have been an insider working on the Apple Newton, and being enthusiastic about it you might have broken the rules and traded on your "knowledge"... and you would have lost your shirt. Same with your very knowledgeable enthusiasm about myriad other technologies. Ever wonder why Wall St doesn't show up at HN asking everybody's opinion about AI in order to leverage that info into billions? an important element of "the wisdom of crowds" is many bits of microknowledge. How many Teslas will be sold next year is very dependent on how much the people who buy Teslas will earn next year (or how secure they will feel in their jobs) working in myriad other industries that have nothing to do with Tesla, along with the price of lithium, tires, and even ... wait for it... gasoline. Polymarket's words you quote can just as likely refer to the wisdom of crowds. Or even, and this is the subtle part: Polymarket's insiders may believe, like you, that they are creating a market to trade on inside information, and yet they, like you, could be made wrong by the superior sum knowledge of the crowd exerting its invisible hands all together to tank your Apple Newtons.
- pigeons 8mo ago
  >Yeah, Polymarket is explicitly advertising this Yes they are. Polymarket has an ad glorifying a "fictional" scenario where someone gets a job as a janitor in a video game company to bet on related events in polymarket

holmesworcester 8mo ago

Isn't insider trading on a prediction market only wrong to the extent the insider is violating some duty of secrecy to the company? And isn't that just between them and their company in a case-by-case sense? If there was some valuable-to-the-public information that the company did not care about keeping private but just hadn't bothered to make public, for whatever reason, and an insider traded on it on a prediction market, that would only benefit the public's interest in information and would not violate any duty to the company. It'd be a pure win for everyone. It seems unfair to other traders, the way it would be in the stock market, but in prediction markets (unlike the stock market) all participants are explicitly taking on the risk that somebody else might have better access to information than they do. So it's not subverting the system in the way we have decided it does in stock markets. A lot of commenters are getting the wrong take here by looking at this like it's a stock market where there is some society-level interest in giving participants protection from having less information than insiders. It's just a different thing.

gtowey 8mo ago
The thing is you're still thinking of these insiders as someone who just got a juicy stock tip from a relative. The much more serious problem is when these insiders actually have their hands on the levers which decide the outcome. It's really no different than a mobster who bets a bunch on money on an unlikely outcome then threatens one side to throw the match. What possible economic benefit is there to society to allow ordinary people to bet in markets like that? Would you really like to live in a world where "Will we nuke Iran?" Is a bet you can make? Then someone in government sees how much money they could make if they bet yes & push the button?
- tgsovlerkhgsel 8mo ago
  This is the entire idea behind the concept of "assassination markets" - "prediction" markets on assassinations that are just thinly veiled ways to crowdsource murders by taking bets that you expect to lose against an "insider" (the killer).
  - 8mo ago

datsci_est_2015 8mo ago

Could also make a case for incentivizing destructive actions by insiders as well. You’re saying I could sabotage my project and make a quick buck?

sigmoid10 8mo ago
That's basically what the current US admin is doing.

ekjhgkejhgk 8mo ago

Excuse me it's called price discovery.