Comment by alphazard
1 month ago
Your criticism applies to any epistemic institution. Prediction markets are far more robust than any epistemic institution that humans have come up with so far.
Contrary to what you insinuate, we don't have 2 parallel markets for each issue, where each groups bets in their own echo chamber market to feel good about their beliefs. The law of one price holds and we have a single market per event, and it almost always resolves such that >> 50% of people agree with the result retrospectively. The resolution mechanism affects the price. If the market is expected to be biased towards a certain outcome, then that outcome will trade at a higher price.
You could easily prove your theory by giving an example of two markets about the same issue, with different arbiters, where the price significantly diverges. Or where the arbiters disagreed after the fact. There will be examples, but how much Volume traded in those markets, compared to the markets where it didn't happen?
I don't know why you're reacting to the parent comment as a criticism - it is just observation. I have spent a lot of time over the years in similar markets. A trivial example - "Will Hillary be the Democrat Nominee?" Yes/No market on PredictIt for the 2020 election.
Even though the market basically settled in 2019 as she missed filing deadlines, a whole group of conspiracy theorists in the "Yes" market descended in the comments, and there was 10-15% on "YES" even til the very last hours they closed the market, which was like a ~week or two before the actual election.
Every news event was interpreted by this group as a "sign" she was secretly running, and they provided their own sources. I was arbitraging this market for the whole year on any "new" hillary news, so paid very close attention to the discussion circles happening around it - I checked in after the market closed and many of the genuine "YES" people putting up as much money as they were able to concluded PredictIt was incorrect and that Hillary was still the "phantom" nominee. It would not at all surprise me if a few of them still believe she actually ran for president. They probably should have closed the market several months before, but they kept it open. If they had closed it at any reasonable point beforehand a huge chunk of the "YES" market would have lost their minds.
People are goofy and prone to conspiratorial thinking. If you want an example of something that there isn't a market for, but just an example of how much 2 groups of people's thinking can diverge - Ask 100 random people what happened to an ICE officer in minnesota that was involved in a shooting very recently.