alt Hacker NewsAs 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.
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amelius • yesterday at 11:45 PM
Why not get a real insurance, where it is actually verified that your house was bombed?
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Yes, but the examples where it's good has a name "insurance". It exists, it's generally well regulated, and is not easily exploited.
The reason it works better is because in a prediction market, the person betting against you has no resources or ability to go after you for fraudulent behavior. Whereas an insurance company has both.