47 points by somerandomness 5 hours ago | 7 comments
syntaxing 1 hour ago
Isn’t this the motivation behind polymarket? To incentivize those that have information to bet as a signal of “truth”. What I don’t get is why would anyone bet on this stuff that don’t have insider information besides those with gambling addiction.
conformist 2 minutes ago
There’s also a vague argument around hedging some actual risks that some market participants genuinely want to hedge… which depends a lot on the specific bet. Eg hedging exposure to specific political events, wars or even company announcements can be relevant and worth a premium for non-insiders. Where there’s a premium to be collected there are speculators to do so.
carefree-bob 1 hour ago
It's not just a gambling addiction, but many people consider themselves smarter than the average person, and nature's way of punishing these people is creating things like stock markets and polymarkets.
kylestanfield 56 minutes ago
It’s a gambling site. The motivation behind it is to make money through transaction fees. You can bet on sports games too.
peterjliu 15 minutes ago
Some people have better data, like insiders.

Some have better models that predict with higher accuracy, given the same data.

doomslayer999 1 hour ago
Because taking high variance slightly negative EV shots is not a terrible strategy when you have a long time horizon.
conformist 9 minutes ago
By “not terrible” you mean “bad but not very bad” and not “good” right?
kibwen 2 minutes ago
"High variance, slightly-negative EV shots on a long time horizon" is a gambling addict's way of justifying the old adage, "sure, we're losing money on each sale, but we'll make up for it in volume!"
delichon 1 hour ago
> Clearly, these insiders have figured out a way to cash in on information. Whether that's kosher is out-of-scope here

To the extent that the value of prediction markets is in their power to predict, insider trading is kosher. Wholesome even.

tedsanders 1 hour ago
Bribing employees to disclose confidential information entrusted to them is not kosher nor wholesome. I consider corporate insider trading on these markets to be analogous - if you're an employee and you trade, you are selling your employer's info for money. Nearly every employer would fire employees caught giving away confidential information for personal bribes.

In the stock market, Matt Levine likes to say that insider training is about theft, not fairness. You can be prosecuted for merely sharing info with a friend on a golf course who then proceeds to trade. Your crime is not trading (you didn't even trade), but misappropriating information you were entrusted with and not authorized to sell.

PollardsRho 38 minutes ago
What about bets without insider participation, where you want the market to function as an aggregator of educated guesses? OP has one reaction to insider trading, but I imagine a very common alternative would be "those insiders make their money off of bettors like me, I shouldn't participate." Some questions are clearly insider-proof, but I imagine many questions have insiders who don't bet on Polymarket. If Polymarket is going to be a good prediction market, surely it should incentivize people to make predictions on those questions too?
moduspol 1 hour ago
Indeed. For those of us not gambling, it's really quite beneficial.
conformist 4 minutes ago
“Hedge funds invest a ton in "alternative data", like credit card transaction data or satellite-imagery (are Walmart's parking lots full?) and need to process as much relevant information as possible to make predictions that are relevant to investments. “

Ah yes the famous credit card data and Walmart parking lots example that hedge funds were giving a few years ago in every interview and news article. Safe to assume that specifically these data sets are not what you should look at to make money.

currymj 30 minutes ago
there is some inevitable "insider trading" in commodities markets. for example if you're a giant agricultural company, and you want to hedge the price of soybeans, you have some extremely relevant insider information about the soybean market. but you're still allowed to trade soybean futures. very different than securities.

if prediction market contracts really are regulated as commodities, then presumably a lot of insider trading must be legal, although there must be limits of one kind or another and probably if you do something really egregious you might be prosecuted under some legal theory.

bstsb 1 hour ago
iirc polymarket doesn't explicitly rule against this, and neither does the law. prediction trading like this operates as "commodities" trading, so they have no obligation to prevent this, and indeed they have an financial incentive to let it continue (assuming others don't leave the platform!)
aleksiy123 1 hour ago
I would go even further and say that it's a vital part of prediction markets as the intended theoretical goal is accuracy of predictions.
aleksiy123 1 hour ago
Out of curiosity, is it possible to see everyone's bets and positions in real time?

Or is the info only available later?

I'm guessing that bots predicting insiders and copying positions is already a thing.

SamPatt 55 minutes ago
You can see when they buy or sell a position. It's on the blockchain so it's all public. And yes, copying positions is called copy-trading and it's extremely popular.

Orders aren't public though. Only the actual trades. This is important because by the time the trade is known by others very often the edge is gone. Especially if you have other people watching the same trader and they all try to copy the trade at the same time.

ralph84 1 hour ago
Not sure why the dumb money keeps playing. If you're not the insider the person you're trading against is.
pocksuppet 39 minutes ago
Because you think you can predict the probability of the insider insidering each way and place a bet before they insider
doomslayer999 59 minutes ago
Because its an event contract with a defined upside/downside and time horizon. You know exactly what you stand to lose and gain and when. Makes it a valuable part of some intricate financial strategies.
taylorius 1 hour ago
"the dumb money"