alt Hacker NewsThe current setup does sort of seem like a tax on being stupid. Why would any non-insider participate in these markets? You’re just asking to get screwed.
Though it’s not that different from the stock market, where the folks at WSB happily give their money to Citadel, Jane Street, and friends, because every once a while, one of them hits it big after going all in that the ball lands on green.
Gambling is a hell of a drug and there are good reasons why it is illegal in so many places. Prediction markets have some good externalities (information), but it’s another addictive outlet for those vulnerable to gambling addiction.
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>Why would any non-insider participate in these markets?
Because they are grossly mis-priced for anyone mildly informed.
As a hedge. Say you own real estate in UAE, and you note that insurance does not cover acts of war. Betting on something like "Iran Bombs Dubai" creates some form of real estate insurance for you.
Even if you suppose my example is bad, you should be able to envision some case where such hedge is helpful.
> Why would any non-insider participate in these markets? You’re just asking to get screwed.
If people who do the obvious trades (sell oil right now - it's going down) lose money, all you have to do is do the opposite (buy oil right now - it's going down) and gain money. Is it not that simple? You will profit along with the insiders when Trump blockades the strait again, although you won't have such perfect timing.
> The current setup does sort of seem like a tax on being stupid.
More like a tax on being ethical or having any morality.