23 Nov 2024

prediction markets and the 2024 election link dump

Eric Neyman writes, in Seven lessons I didn’t learn from election day, Many people saw the WSJ report as a vindication of prediction markets. But the neighbor method of polling hasn’t worked elsewhere. More: Polling by asking people about their neighbors: When does this work? Should people be doing more of it? And the connection to that French dude who bet on Trump

The money is flooding in, but what are prediction markets truly telling us? If we look back further, predicted election markets were actually legal in the US from the 1800s to 1924, and historical data shows that they were accurate. There’s a New York Times story of Andrew Carnegie noting how surprisingly accurate the election betting markets were at predicting outcomes. They were actually more accurate before the introduction of polling as a concept, which implies that the introduction of polling diluted the accuracy of the market, rather than the opposite.

Was the Polymarket Trump whale smart or lucky? Whether one trader’s private polling tapped sentiment more accurately than the publicly available surveys, or whether statistical noise just happened to reinforce his confidence to buy a dollar for 40c, can’t be known without seeing the data.

Koleman Strumpf Interview - Prediction Markets & More 2024 was a huge vindication for the markets. I don’t know how else to say it, but all the polls and prognosticators were left in the dust. Nobody came close to the markets. They weren’t perfect, but they were an awful lot better than anything else, to say the least.

FBI raids apartment of election betting site Polymarket’s CEO and seizes cellphone, source says Though U.S. election betting is newly legal in some circumstances, Polymarket is not supposed to allow U.S. users after the Commodity Futures Trading Commission halted its operations in 2022, but its user base largely operates through cryptocurrency, which allows for easy anonymity.

Polymarket Explained: How Blockchain Prediction Markets Are Shaping the Future of Forecasting (Details of how Polymarket works including tokens and smart contracts.)

Betting odds called the 2024 election better than polls did. What does this mean for the future of prediction markets?

Prediction Markets for the Win

Just betting on an election every few years is not the interesting part, though. Info Finance is a broader concept. [I]nfo finance is a discipline where you (i) start from a fact that you want to know, and then (ii) deliberately design a market to optimally elicit that information from market participants.