While Robin Hanson was busy signing Bob’s petitions and blablabling on philosophy, Jason Ruspini answered the questions.
Jason Ruspini (“The Brain”) has established himself as one of the experts in the field of prediction markets. Listen up.
-
1-2) These markets could have insider trading restrictions and forced settlement w/ new contract set.
.
3-4) The CFTC/NFA could monitor a “large trader†list and have special reporting requirements for them. If trading seemed unreasonable given the objective outlook for a candidate, they could begin an investigation.
.
5) Don’t void or unwind the market, just settle the contracts at the price immediately before the event and then start a new set of contracts as soon as possible.
.
The only problem there is what happens when a price manipulation precedes an event such that the manipulated outcome locks-in the “manipulated†prices. The arrangements in 3-4) would go a long way towards addressing that scenario. Failing that, contracts could be worded in such a way to allow for freezing funds and unwinding trades in that sort of situation. Also, it would be difficult for a trader to set-off a feedback loop in a liquid binary market even if they were very large.
