I don't understand how prediction markets actually predict the future if all it's doing is charting the emotional reaction to the most immediate stimuli.

Seems pretty fit for predicting irrational human behavior, esp on short timelines.

Seems esp unfit for predicting things outside human control.

I don't understand how prediction markets actually predict the future if all it's doing is charting the emotional reaction to the most immediate stimuli.

Seems pretty fit for predicting irrational human behavior, esp on short timelines.

Seems esp unfit for predicting things outside human control.

https://x.com/Polymarket/status/1820478604272189591?t=d9w95X_b-qnaopDV2vnEfg&s=19

Founder, designer, & product guy at /basepaint and /eigenlayer

eventually the arb -> sparse momentum approximation -> smart/inside indicators

𝖒𝖆𝖓𝖉𝖆𝖙𝖚𝖒 𝖆𝖉 𝖆𝖘𝖙𝖗𝖆

Ok that makes sense. That assumes some things about participation but that makes a lot more sense than the boiler plate wisdom of the crowds explanation I get.

But it still only seems to be a good leading indicator near term though, right?

definitely, I think the market gets made by speculators (in the vague future sense), but eventually the volume facilitates the cross-market arb, and so there might be some market maker that just acts more critically w/ more lead everywhere possible to corner whatever the speculators cook.

idk, though, there's probably other market mechanics that turn everything on its head (while being effective at prediction).