Although prediction markets can work well, they don’t always. IEM, PredictIt, and the other online markets were wrong about Brexit, and they were wrong about Trump’s win in 2016. As the Harvard Law Review points out, they were also wrong about finding weapons of mass destruction in Iraq in 2003, and the nomination of John Roberts to the U.S. Supreme Court in 2005. There are also plenty of examples of small groups reinforcing each other’s moderate views to reach an extreme position, otherwise known as groupthink, a theory devised by Yale psychologist Irving Janis and used to explain the Bay of Pigs invasion.

The weakness of prediction markets is that no one knows if the participants are simply gambling on a hunch or if they have solid reasoning for their trade, and although thoughtful traders should ultimately drive the price, that doesn’t always happen. The markets are also no less prone to being caught in an information bubble than British investors in the South Sea Company in 1720 or speculators during the tulip mania of the Dutch Republic in 1637.