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305 sats \ 3 replies \ @Undisciplined 9h \ on: Why prediction markets aren’t popular oracle
I don't understand why prediction markets are being compared to anything else in terms of trading volume. Why would they need to have high volume?
If someone sees a speculative opportunity on some mispriced odds, it only takes their one trade to move the lines.
I suppose they could make all PM activity tax exempt. That would treat it like a public good.
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I'm sure those two things are correlated, but why would stock trading volume be a point of comparison? I have no idea, a priori, what that relationship would be in an ideal situation.
The point of prediction markets is that they aggregate the available information. If the price moves to roughly what people think is the right level, then there won't be much further movement, even if interested potential speculators are looking at it. You'd expect lots of movement on something where there's a lot of disagreement about the likelihood.
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Arbitrage opportunities exist any time a trader perceives a difference that is suspect, no matter the size of the market. This speculation is just that, speculation, it is not investment or saving and, if the speculator knows very little about the field being speculated upon, it is called gambling. Many speculators do not like to hear it called gambling, but what else could you call it? Would that make Prediction Markets bookies, then?
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