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Comment by Spacecosmonaut | Hacker News Reader

There is genuine value in a wisdom of the crowds assessment of future events that is only sharpened up by the requirement to put money on the line.

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The often-repeated "wisdom of the crowds" justification is misapplied to online betting markets. Like people, crowds can either be wise or unwise depending on the situation. Famous experiments like guessing how many gumballs are in a jar work because each person who can see the jar has a source of valid information, and in aggregate that can be surprisingly accurate.

You can't assume that the majority of individuals participating in betting markets have a source of valid information. Given the destructiveness of these markets to both individuals and society, the aggregate wisdom of the individuals participating in these markets is highly doubtful. Any meager value above more traditional forecasting does not justify the cost, corruption and a loss of trust in institutions.

Nobody says this on assumption. It's well-evidenced.

https://polymarket.com/accuracy

https://www.metaculus.com/questions/track-record/

Please show the dollar/realized benefit to society VS (in response to OPs statement) the results don't "justify the cost, corruption and a loss of trust in institutions" along with a breakdown of the cost/negatives to society that result from those factors.

This isn't big oil (yet) you can't just externalize all the downside and say the product is a net benefit.

Pish tosh, my dear sir, it's simply common-sense that there are oodles of people out there with secrets that would be completely ethical to distribute and would undeniably better all humankind, but they're sitting on them purely because they haven't figured out how to make a profit from it. /s

In other words, the overlap between these is too small to justify the idea that prediction markets are a net-benefit by default:

1. Is valuable

2. Not already known

3. No current reward mechanism exists (e.g. patents)

4. Not criminal or unethical to disclose

Well-evidenced by marketing from those same betting markets, got it.

I'd be interested in learning in what ways it is factually incorrect.

There is definitely value in that, but that value is outweighed - dominated, even - by the incentive produced to fix outcomes, incentivized by that money put on the line.

How dare you impugn the mystical powers of the wisdom of the crowd. Why would anybody fix outcomes?

Wait a minute, you can bet on pro wrestling? OK I'm out of ideas.

https://www.betus.com.pa/sportsbook/entertainment/wwe/

It would be useful to predict things like earthquakes and tornados. Gambling on what politicians and celebrities will do is not science it's degenerate court gossip.

Game theory can be applied to these problem, and if you can correctly model reward, cost and motives, you can predict decisions of politicians more often than not.

> you can predict decisions of politicians more often than not

What makes you believe this? The performance of economist/sociology experts using game theory to make predictions has been worse than a coin-flip up to this point. It also has done enormous damage.

Even granting the idea that game theory can be applied successfully here; that does not really help with one-off events. Consider, knowing the odds of a coin flip does not grant you any real help in knowing what the next coin flip will be.

This is also ignoring that game theory of partisan games breaks if any of the participants knows what the other will do. Is one of the more famous ideas.

To that end, if you want to predict what someone will do, more often than not you are best looking at their experience doing said thing.

I don't think Nash envisioned politicians and their aides being able to profit from making decisions. Do you launch an attack on Eastasia? Well the market right now says there's a 40% chance, so I guess it's a good idea to grab your crypto keys and make some bets before you call the Joint Chiefs.

I think you're right broadly, but when that wisdom is applied to e.g. how many dildos will be thrown at WNBA players, I don't know how much actual value is created.

That… that actually seems like something which society should want to predict with more precision so that we can hire someone with a net on a stick.

It's also a real world event that can be influenced by the existence of the bet.

There's value in that only if assessments made by people using the prediction for something aren't better than crowd wisdom. I would guess that a large part of prediction market participants are simple gamblers whose assessment is worse than the prediction of someone doing it because they need the information for something.

So if people who need predictions for decision-making start relying on prediction markets with a lot of low value gambler predictions and opinion manipulators (wealthy participants can use the platform to mislead people as well) the value of these things might be negative.

Or if decision makers start using the gambling markets to drive their decisions, the value of these things will go extremely negative.

The headline bet in Polymarket right now is on when US troops will invade Iran. If some unscrupulous official can pull some strings to get boots in the ground in the next few days, they stand to win a significant amount of money.

Genuinely asking: has there been a case of the prediction markets being "right" or valuable about something outside of the norm?

That's why the metaverse happened. Lots of money bet on it's success

My understanding of the world is enhanced immensely because suckers can bet on how many times the president will reference the lips of his press secretary in a speech.

Wisdom such as the mass purchase of GameStop shares, temporarily inflating the value of an ultimately doomed company?

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