Prediction markets have value for people as a source of reliable information because they tend to be very accurate compared to any other human mechanism for creating forecasts.
https://marginalrevolution.com/marginalrevolution/2025/10/pr...
Are you gonna tell me residents in Tel Aviv will be able to hedge their chances of surviving tomorrow?
Nor there's evidence that providing information about the fact that US will strike Venezuela does it either.
What value any of that has? None, especially considering the perverse incentives on the other side of acting on the outcome probability for financial gain which has already happened. US executive insiders have definitely bet on US attacking Venezuela on Polymarket.
You see this as "information discovery", I see it as the fact that I can lobby for dangerous events to happen just for financial gain.
Future markets have some value in some scenarios where you can hedge the outcome.
E.g. a farmer hedging crop prices can de risk his operations.
There is a hedging and the hedge works as insurance.
What's exactly the value of betting on elections or military strikes? What's being hedged?
How can you not see the financial incentives?
We have a long history of regulating both futures, derivatives and betting for very specific reasons.
But now we've relabeled it all as information gathering and price discovery.
How can you not see how the financial incentives here are speedrunning terrible events to happen?
I'm gonna rephrase it like that: would you like for a contract to exist on whether you'll be sent to hospital tomorrow in a crash accident?
Are you gonna tell me: "well, it's information discovery and it's valuable that I can wake up knowing the odds have increased!" while ignoring that there are now people out there financially motivated to make this happen?
Yes, of course! If you had some advance warning your home town was likely to be struck with missiles soon, are you seriously saying you can't think of a single thing you could do to prepare? I would, at a minimum, make sure I was stocked up on first aid supplies, water, and food that I could eat without needing power or gas to cook it.
That there are economical incentives to make it happen just to make money?
Such events have little-to-no "wisdom of the crowds" those events decided by a handful of people. And their consequences catastrophic.
What if there was a derivative for whether you will be hit by a car tomorrow?
What would you say if there was a contract on whether your county will burst in flames this month?
Are you happy because you can hedge this event, or don't you realize the obvious peril?
I don't see how there is. The liquidity in a prediction market is not high enough to compensate for the expense of going to war.
The war was going to happen irregardless of the prediction market. The prediction market only let us know when it was going to happen with some hours to spare.
If there was a prediction market for whether I'll be hit by a car tomorrow, and it was lucrative enough that it would actually be worth anyone's time to deliberately hit me with a car, I'd stay home and bid on "no". Pretty sure I'd make more than enough to cover the cost of ordering pizza.
There are already perverse incentives to commit arson, like insurance. And it's entirely possible that prediction markets can make insurance even more cost-effective.
Not your money, you can be just a random in the executive and lobby for it.
More seriously - I used to think this was a good argument. But the night before the war broke out, I checked Polymarket and the odds were under 20%. I also checked the news and listened to my gut, and I'm glad I made the call to fill up my car's tank and prepare my go-bag. Came in handy when we woke up to sirens and had to move fast to get closer to shelter.
Yes, it's anecdata, etc etc
I agree that these markets also create bad incentives, I just think that on net the information provided tends to be more valuable.
Imagine the conversation went like this:
A: "Maybe we shouldn't sacrifice 500 virgins to the Aztec God to predict the harvest next hear?"
B "Why not? Killing virgins to predict the harvest are well calibrated (ie accurate).."