Comments on: Who would you back, the market consensus or a book-writing pundit?

By: Jason Ruspini

Jason Ruspini — Fri, 25 Apr 2008 13:11:51 +0000

Contracts that do not duplicate or settle on an existing regulated future/stock/index. All of the financial contracts on Tradefair are duplicative and exist mainly to provide leverage to small-account traders, who should ask themselves whether they might be as well off betting on coin flips.

By: Chris F. Masse

Chris F. Masse — Fri, 25 Apr 2008 12:21:36 +0000

@Jason Ruspini: “non-duplicative financial contracts”. What’s that in plain English?

By: Chris F. Masse

Chris F. Masse — Thu, 24 Apr 2008 23:02:44 +0000

@Jason Ruspini: That is true. And this is why BetFair is not into socially valuable prediction markets. However, what does John Delaney at InTrade is priceless for free-market people who like prediction markets. And it gets inTrade all the good Press, which is priceless too. So InTrade gets ROI in the form of free publicity.

By: Jason Ruspini

Jason Ruspini — Thu, 24 Apr 2008 22:32:39 +0000

Really the question is why prediction markets have not caught on where they are legal. Why isn’t there a non-US-facing prediction market exchange like Intrade? (Meaning one with a focus on innovative non-sports and non-duplicative financial contracts) This suggests that PM enthusiasts might overestimate the demand for such innovative contracts.

By: Chris F. Masse

Chris F. Masse — Thu, 24 Apr 2008 09:11:47 +0000

@Jason Ruspini: I don’t think there is great competition between real-money prediction exchanges. A de facto monopoly forms itself (InTrade-TradeSports in the US, BetFair in the UK).)

By: Jason Ruspini

Jason Ruspini — Thu, 24 Apr 2008 01:14:55 +0000

One thing to keep in mind is that subsidizing need not be coupled with market-making. Simply being paid interest on your deposit/collateral as with futures would be a huge step for prediction markets. This will happen along with legalization and regulation (and therefore competition).

By: Michael Giberson

Michael Giberson — Wed, 23 Apr 2008 11:58:38 +0000

I haven’t seen any studies of how well different subsidies work. The market scoring rule-based automated market makers are a prominent class of subsidized prediction market. (See Robin Hanson’s article “Combinatorial Information Market Design” if you haven’t already.) Abramowicz proposes a variety of ideas, but I haven’t seen any systematic comparisons of different types of MSR and their are other forms of subsidized market makers that could be looked at as well.

By: Prediction markets can be directly subsidized with a market maker, allowing all traders who provide info to improve the price to expect to profit. Also, the more fools the more informed traders should be attracted to profit from them, so the mix is endoge

Wed, 23 Apr 2008 06:56:24 +0000

[...] See also that question for Mike “Barbecue” Giberson. [...]

By: John Salvatier

John Salvatier — Wed, 23 Apr 2008 01:47:52 +0000

You mention subsidized prediction markets. Do you know of any papers which investigate how well different subsidization schemes work? I read Predictocracy, which discussed subsidized markets a good deal, but I did not see any references to such papers.