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The issue I have with prediction markets.
I see a lot of praises about prediction markets on my timeline. Most of them are neutral, just acknowledging that it is working, and some other are very positive about it, arguing that it's a better approximation to truth than anything else. it can predict the future better than any other tool.
It's with these people that I have a fundamental issue. They either don't see the mechanisms at play, or they're cynically pushing this narrative because they have financial stakes in prediction market platforms.
My point is, prediction markets are not good at predicting truth or the future, but they're good at shaping it. We're living in a world where money can virtually buy anything, and some of the wealthiest persons on earth have level of wealth that would outweigh the gathering of millions of people. When a market is created on something where one person has an enormous swing, there's an incentive for that person to buy into the lowest odds result, and make it happen. In this case, creating the market itself already virtually alters reality.
When the stakes are high enough, there's also an incentive for a wealthy enough person to try to bribe the people who have enough sway over the result to make it go towards what this individual bets on.
This is also something that we can see with persons who have a tremendous amount of power on pretty much anything, like Trump. People with no morals in his entourage, or even himself, have a strong financial incentive to front run a market, or worse, to take a political decision based on the amount of money they can personally make out of it through prediction markets.
This creates perverse incentives leading to a plutocracy, but even further, to a society where the future is decided by rich people, based on the bets they decide to make. Sure, there are markets that are extremely hard to manipulate entirely because they depend on so many factors (for ex., NBA champion prediction market), but there are also a lot which are much more centralized and open the door to this kind of abuse.
That's the reason why I can't be happy seeing prediction markets going viral. It is not a good thing for our society when every fact has an associated financial stake that can be manipulated by people with enough money. 0 reply
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