Well, now we're talking!
I have doubts about prediction markets: the more I look and read, the more they're softened. Still, it's a little unclear what they do for society that's good and whether a sane, reasonable person should favor them. #1518216, #1520598, #1521591, #1524119, #1524671
"Kalshi is planning to offer users to trade contracts around flight cancellations — and potentially hedge against their own travel woes."
This product already exists: it's called travel insurance. It's rather underused and comes in pretty poor quality (for most people, by most providers) but yes, worth making.
Apparently it's not a flight-specific one but an average share of delayed flights at a given airport:
The contracts will allow users to predict the percentages of flights canceled at an airport within a given timeframe. The prediction-markets platform disclosed the contracts in a Tuesday filing with the Commodity Futures Trading Commission.
Kalshi said it plans to use the flight-tracking platform FlightAware to resolve the contracts, with data from the U.S. Department of Transportation as a backup.
"The move follows a turbulent several months for travelers, who had to contend with heavy winter storms early in the year, disruptions from the war in Iran, and the shutdown of Spirit Airlines in early May."
Depending on where you're traveling from and with what airline, there are probably ways to actually use this contract.
Me like.
archive: https://archive.md/lNKT5
The contract working based on a share of cancellations is pretty smart. Avoids the most egregious incentive problems.
On the other hand, it exposes you to a worse case scenario as a form of travel insurance: your specific flight is cancelled but the airport was just fine
precisely. Maybe there could be various levels -- 10%/1%/0.1% of flights? That would shrink the gap quite a bit. Again, @Undisciplined ever-echoed point about granular liquidity here is gonna be a problem
Some airline could experiment with refund policies that they back up against the prediction market.
An insurer might not offer them a policy since it’s in their power to cause cancellations.
I doubt flight cancellations will get much activity. Also insider trading could be a problem. What stops the guy who does the final safety check from taking a YES cancelled position and then grounding the plane while the plane is sitting on the tarmac and showing On time.
nothing. PRediction markets become falsehood machines -.- #1520598
Your point about travel insurance is how I largely think about prediction markets.
There are large industries that exist by charging a spread in zero sum games: namely insurance and gambling.
Prediction markets can be more efficient than those in many cases, so their economic gains are from reducing transactions costs in existing markets.
and it's decentralized and open/transparent and via Predyx, obviously bitcoin-based. When is Kalshi acquiring Predyx?!
...and yes, I'm learning. It takes some warming up to it... freaking Robin Hanson has been shouting about this for a decade, so I mean gimme a break! :)
The social function that I like best is the wealth transfer from people who are wrong about stuff to people who are right about stuff. That’s been going in the wrong direction for a while.
totally.
In Bitcoinland, the BIPtards and the Twitter algo change are the first major casualties here. LOVING IT.
professional flight cancellatoors
I wouldn't be surprised if Kalashi paid someone for the WSJ to write this post
"Hedging" is probably the only good thing about gambling. And it's a niche usecase of this kind of gambling. Exactly the kind of Propaganda that Kalashi needs.