The recent green dildo escapades at the WNBA had me thinking about prediction markets. This is a realm I don't know much about, but I often see folks like @Undisciplined and @Coinsreporter and company posting about their adventures on Predyx and it makes me curious. Anyhow, I came across this article that was pretty critical of such markets.
The tldr is that prediction markets aren't good markets because they either they are difficult to hedge or they become incentives for market-throwing behavior.
This gets back to the green dildos. Imagine the phenomenon began accidentally (it doesn't seem that it did), but got enough attention that people made bets about whether it was likely to happen again.
If the market gets at all large, it seems pretty inevitable that someone will come up with the idea of influencing the outcome...
Maybe the real question here is who in the world takes the 'no' side of such a bet when the the yes men seem very eager to bet?
The article doesn't answer this question beyond saying
If the existence of a prediction market directly affects the outcome, then it's not truth-seeking anymore.
@south_korea_ln had a great comment on a recent post about hedging on Predyx
I see it as a way to reward/incentivize this other bettor to make the unlikely happen, thanks to his more direct control. If I lose this bet, I'll feel good about it, because then it means SN is doing better than expected
I'm curious how many people think of prediction markets as tools to effect change in the world versus tools to digest community knowledge about the likelihood of a certain outcome?