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Comment by cowpig | Hacker News Reader

Just game-theoretically, suppose you bet $100 on some disaster.

That disaster causes $10,000,000 of harm, but only causes you $90 of harm individually.

You've gained $10, but your $10 gain is a millionth of the harm caused.

Generally-speaking, there's an enormous asymmetry between the cost to create/build and the cost to destroy. So now we have a mechanism by which individuals have a financial incentive to cause harm...

Don't these markets create a mechanism for society to race to self-destruction?

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Search for "assassination markets", which is a longish treatment of this idea. Specifically, people collectively can bet large sums of money that X will not be killed Thursday at 5pm. And anyone can take the other side at insanely good odds...

Couldn't that be said of stock markets and any markets?

United Healthcare stock dropped 10% immediately after its CEO was killed.

Well, there are laws against insider trading.

Prediction markets advertise insider trading as a feature, and enforcement of financial crimes is a racket anyway. If you know the right people, make the right campaign contributions, laws just don't apply to you.

this kind of cynicism is malignant

See I would say the malignant part is the systems and people in power who enable and profit from corruption.

The statement that "this is how it works, it's completely corrupt" is what enables the corruption.

It is only through the collective demand that systems serve us that they can be aligned.

If you believe that the system is corrupt then your decisionmaking function will conclude that taking action to demand systems serve you is useless.

But it's only useless if we collectively believe it is useless.

This is what I mean when I say that cynicism is malignant. The more people believe it, the more true it is.

but you don't deny there's some element of truth to it tho?

Is shorting a company and then murdering its CEO considered insider trading in your jurisdiction?

That wouldn't be insider trading; in fact unless the CEO's death was known to insiders, it almost by definition couldn't be insider trading.

It could be other types of fraud, however.

Wait, is the shooter in “insider” in this case?

Yes, and sounds like a great way to get RICO conspiracy to commit murder added to your charges just for trading on it.

How is that different from regular old insurance?

Insurance is usually for things that primarily affect the purchaser?

There is no law that requires that and plenty of policies are bought that don't directly effect the purchaser in the way you imply.

And in some of those cases they can warp incentives, right?

How does someone with a mere $10 stake have the opportunity to contribute to the cause of a $10mil disaster?

Realistically, they'd have to be far more connected to the event, and as such, far more exposed to some kind of risk.

Pessimistically, i imagine that's what they meant by "enormous asymmetry between the cost to create/build and the cost to destroy". Like its a lot easier to destroy an art piece in a museum than to create one.

That simply describes entropy. I don't know what the example of someone putting a wager on an event represents.

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