Comment by epolanski
3 hours ago
Also, I really feel like so many of the people defending prediction markets don't understand the very basics of economy and behavioral science: incentives.
You're creating a legalized system with the incentives to influence events to make terrible stuff happen.
We've already seen huge bets on the deadline of US attack to Venezuela spike few hours/days before the actual aggression.
Which means that insiders not only hold information, but have the incentives to make stuff happen.
And naysayers (which seem to be dropping from the same basket of NFT/crypto cultists) will tell you that this is about probability and information discovery.
And the naysayers would be right. They come from two approaches:
- Property rights: bettors are waging using their own property at their own direct risk. To prohitbit such a thing is to violate their property rights, plain and simple; - Information aggregation: prediction markets originally appeared to help make informed decisions about an event by proof-of-stake. If I'm not mistaken, this idea was originally developed by NSA/CIA/FBI for this purpose.
You mentioned misincentives like hold information (which isn't actually related to prediction markets, but more so to NDAs and similar) and "making stuff happen". The latter is functionally the same as policemen/judges/prosecutors/prisons having an incentive to create more criminals. Really, most goals people have may be achieved via criminal means. We don't outlaw free will because people have an incentive to achieve their goals via criminal means, we increase punishments (increasing potential loses), improve tracking/prevention (reducing success chances), etc.
Gambling -> bad gamblers lose -> bankruptcy -> creditors eat losses
Technically, a lot of gamblers are gambling someone else’s money, they just havens lost enough yet for it to matter.
If you want to bring back debtors prison I guess I’d be fine with legalized gambling. If I’m stuck holding the coupon, I’ll pass.
> bettors are waging using their own property [...] To prohitbit such a thing is to violate their property rights
This is technically true but doesn't deserve top-billing. Any fraudster or embezzler (or mugger or drunk-driver) will incidentally be risking some of their own property while exercising their right to control it.
> informed decisions about an event by proof-of-stake
A large chunk of the problem here occurs when people (politicians, judges, police, CEOs, etc.) are wagering assets and outcomes that aren't actually theirs, but things they control in (violated) trust. In other words, the personal "stake" of their overt bet is actually far too small.
> The latter is functionally the same as policemen/judges/prosecutors/prisons having an incentive to create more criminals. [...] we increase punishments
So... repercussions like "is is a crime for those people to possess a private account on the anonymous bribery website"?
In regards to first point, I might not have made it clear, but betting, on its own, does not harm others, contrary to mugging or hitting a car. Property rights come with the associated duty of respecting others' properties afterall. Failure to do will result in the duty to repair and pay to restore the "correct" state to best of their abilities.
Onto the second, I don't think the people you mentioned actually wager stuff that they don't own. To be more precise, the problem is that they use criminal means to "rig" the bet in their favor. That, at least, seems to be what OP is talking about with incentives.
Finally, regarding the last, I agree that roles that require trust should have more norms and rules to enforce that trust. In case of strictly private roles, I personally believe they should be done via contracts and cultural pressures. For governmental roles, they should be enforce by laws (such as the one you suggested). Since this is a top-level, abstract, description, we can get into more about more specific cases (such as CEOs).
No, they would be wrong.
Have them have a prediction market on whether their house will be arsoned tomorrow or they will be hit by a car and instantly they will recognize the danger of the incentives and the bs of "information hedging based on price discovery".
Cause way worse events allow betting and profiting.
Give me a break, we're at the complete decadence of society and its intellect. Nobody can recognize right or wrong anymore let alone understand why insider trading, betting, etc, has been outlawed and prosecuted forever.
We live in the vilest era I remember since I was born, this is beyond disgusting.
I suggest that you think rationally about what you just said. Why wound anyone open a bet on "rando's house will be set on fire"? Why would they bet on "yes"? You can't present a generic case such as that without going into details about motivations and actual incentives.
Those way worse events also have a lot of extra political motivations behind it. If someone starts a war with the sole intention of winning a bet, there might worser problems than prediction markets.
The third paragraph might as well have been written by a consertive nutcase. Surely, if only you can recognize rights and wrongs, then you can objectively and undeniably prove them to this forum. On its own, it isn't much more than a appeal to tradition.