alt Hacker News> prediction markets should not exist
If you don't like prediction markets, you don't have to use them.
Why do you think other people shouldn't be allowed to use prediction markets if they want to?
Replies
1. It gives people a reason to influence events toward outcomes that they can make money on rather than the best outcome. The geopolitical equivalent of going down in the fourth on purpose.
2. It encourages the leaking of classified information.
To quote golden age Simpsons - "Gambling is the finest thing a person can do IF he's good at it" [0].
In aggregate, most participants lack the background and experience needed to hedge against risk and bet intelligently.
Gamifying a financial instrument (futures) that is supposed to be used as an risk management device and advertising it to the lowest common denominator without providing the right checks and balances will leave a large portion of bettors worse off.
Heck, I'm decently good at blackjack, poker, and backgammon because it's fun to apply probability theory principles, but I would never dare put my personal money on such an investment when I would do significantly better in aggregate with other more diversified personal investments.
Because we don't want people whose profession is maximally exploiting perverse incentive structures to flourish. A society that grants outsized rewards to bad faith citizens is bad for everyone. The more influence those cheaters have over the economy the worse off we all are.
You should not be able to get rich to the tune of a 600% daily return just because you're insider trading. That doesn't incentivize sharing your information with the market. On the contrary that incentivizes delaying communicating your secret information until the last second to maximize the return on your unexpected information.