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You may be interested in "Do Morons Make Prediction Markets More Accurate?" - https://nicholasdecker.substack.com/p/do-morons-make-prediction-markets https://ni
by YokoZar 7mo ago
You may be interested in "Do Morons Make Prediction Markets More Accurate?" - https://nicholasdecker.substack.com/p/do-morons-make-prediction-markets https://nicholasdecker.substack.com/p/do-morons-make-predict...
Essentially the argument is that more dumb money in a prediction market provides an even stronger incentive for smart money to join, moving the price back to an accurate probability.
- duxup 7mo agoIsn't the smart money incentive there because the market is wrong? That also seems to assume that there’s enough smart money (and smart information) to balance things out. I’m not sure about that.
- skybrian 7mo agoIn a larger market, traders can make money off smaller price discrepancies.