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Comment by cthor | Hacker News Reader

The utility is a fairly robust signal about the probability of certain events occurring. It's pretty helpful for grounding your beliefs about the world (in certain domains).

For example, I had a lot of people ask me about the Hantavirus and if it was worth worrying about. I didn't have to do any research other than look at the various prediction markets and see them all at 5-10% to determine it was probably a nothingburger. Much quicker than having to parse a bunch of fearmongering news reports and such.

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Even for that function, I think their benefits are overrated. Someone could easily manipulate that number if it fits their purposes (ie a health tech startup trying to peddle some cure). The numbers given to you are an illusion of understanding that does not replace actual research.

I don't think it's as easy to manipulate as you say.

Smaller markets are easily swayed by not so much money. Arbitrage is difficult because there is an inherent threat that you're betting against insider information.

In this specific case it's clear that the market doesn't represent our collective knowledge about hantavirus at all. Twenty days ago the odds of a hantavirus pandemic being declared by the WHO were ~10% and now it's 5%. This is just a reflection of the news cycle, it would be nuts to say that this is a reliable estimate for the underlying scientific facts.

That is not surprising. If your point is that 10% is not 5% and the odds change over time then you have unreasonable expectations. It's not an oracle. Where did I say it was? I said it's a quick and robust signal. Of course there's plenty of ways to get alpha, but those require both effort and domain expertise.

Is this a standard you hold to any other single signal? Name it. What signal (a) predicted <3% over a month ago and (b) you believed prior to be a reliable signal?

There is no substitute for effort and domain expertise, that's my point. Polymarket would like you to believe that their odds represent some sort of collective knowledge, but they don't, it's not like the world's top experts in epidemiology are trading on this issue. Worse, as I explained someone might be trying to manipulate the odds to their benefit, which for the particular case you cited would be quite cheap to do.

These are sensible criticisms and things one should be mindful of when using prediction markets as a signal (I would also add an awareness of how discount rates affect the reliability of markets that trade at low probabilities), but none of them justify the original statement being contended with, which was: "They offer zero positive utility to the world."

Maybe you're right, but your main argument above is circular.

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