Robin Hanson is schooled about prediction market trading.
Our guest author to our Master Of All Universes:
Feedback trading just means the kind of momentum trading that is pervasive in traditional assets, again, less so in prediction markets. In the biastest experiment, traders were given formal “clues” about the settlement, but for many market participants, the best “clue” (even rationally, if lazy) is recent price action. Even if feedback trading was possible within the experiment, the outcome (manipulation attempts were corrected) suggests that it wasn’t prevalent.
In this experiment, traders were given equal endowments of shares/currency… i.e. initially had equal account sizes. Yes, there were an equal number of manipulators and non-manipulators, but they could not coordinate. Even if they were implicitly coordinating, this is not the same as a single large trader influencing the market. Yes, in the theory paper trading sizes were variable, but according to the same parameter for each trader. Maybe if there were a large supply of potential traders able to frictionlessly join the manipulated market, a manipulator’s relatively deep pockets wouldn’t matter.
I don’t think Robin Hanson was “schooled”. He was just asking for clarification.