Similarly, insider trading is highly regulated in most countries, and there is a fundamental misunderstanding of the market and its purpose. A trader in the prediction market makes money if he has information that is not publicly available (and therefore not yet included in the price). Only then can they move the price correctly, and only then does the price contain relevant information. In both prediction markets (including equities as a special case of prediction markets) and decision markets, it is the insider information that we want. The insider’s “disproportionate profit” is actually a good deal for the society – someone sells us information and makes money on it. A well set up prediction market will ensure that the information we buy has a higher value – that is, for example, we make a much better decision than the price we pay for the information. And a well-functioning prediction market attracts and supports insiders who have the best information. At the same time, the presence of money and market prices provides skin in the game. It’s not “opinion over coffee” or the opinion of an analyst in the media.

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