

Prediction markets - Moshe_Silnorin
http://www.gwern.net/Prediction%20markets

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jc123
It's not clear what parts the author modified last month, since the bulk of
the article is from the past. A separate, additional article would be
interesting to hear author's recent views and experiences.

For something upcoming, [http://www.augur.net](http://www.augur.net) is an
attempt at a decentralized prediction market.

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jedc
Fun historical fact. One of the few prediction market companies to get VC
funding was a UK company and their product HubDub.

But the team saw the direction of their business and decided to switch
everything they were doing and go into same-day fantasy sports. And that's how
FanDuel began. (Roughly $1bn in market cap later)

Also, Inkling Markets was a YC W06 company and they do prediction markets as a
service. While I don't think they raised any significant VC funding, they're
still operating.

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m0c
Previous discussion:
[https://news.ycombinator.com/item?id=6489135](https://news.ycombinator.com/item?id=6489135)

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realsimoburns
Pivit is making some interesting strides in this market, it's been years since
VC dollars have gone into to trying to dislodge the space. Derivative impacts
of having a highly liquid prediction market are incredible.

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mikro2nd
Please elaborate. Having some difficulty understanding what your second
sentence even means: Are you talking about derivatives markets? or about
impacts that derive from...? And why do you think this is so?

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nulltype
This doesn't seem to mention one of the more interesting prediction markets:
[https://www.predictit.org/](https://www.predictit.org/)

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navait
Would you mind going into why it's more interesting? My cursory glance of
predicit made it seem to be an intrade clone.

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nulltype
Intrade doesn't seem to exist, so I think by definition it's more interesting
than that.

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Houshalter
People don't seem to like the actual prediction markets which have been tried
because they were biased. However if that's true, and you know it, then it
means you can effectively use them as a free money pump. E.g. just bet for
whatever Nick Silver predicts.

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rspeer
Nate Silver, not Nick.

There are problems with liquidity and volume, and the general difficulty of
getting money in and out given that these services tend to be banned in the
US.

I once saw a clear opportunity for arbitrage on Intrade, when the currently-
bid odds that 8 particular Republican candidates would win the general
election added up to more than the odds that _any_ Republican would win the
election. But acting on it would have required getting a large amount of money
to Ireland for the opportunity to make a small amount of money, and fees would
have eaten all the profits.

In fact, some of the bets were clearly stupid on their own, and yet you
couldn't really profit by betting against them. Someone would be bidding 1%
odds that a candidate would win the election when that candidate had already
dropped out and endorsed someone else. If dropping out didn't send their odds
to 0, what would? You could make 1% profit but it could take until the
election to collect it, so you might as well just put that money in a savings
account.

But, yes, if prediction markets were popular, high volume, and legal in the
US, then you could make money off of some of their biases.

