7 ms·

Basically arbitraging human imagination. People love coming up with fantastical concepts because they get attention, but the more exciting a market is, the less

Basically arbitraging human imagination. People love coming up with fantastical concepts because they get attention, but the more exciting a market is, the less likely it is to actually happen. Reality is usually boring.

nemomarx 5mo ago
This makes sense to me, but isn't there a risk of increasing the potential payoff high enough that someone is motivated to go out and make the yes side happen? Consider this bot running on us military outcomes or something.
- cryptonym 5mo ago
  By design it's a game where people with inside knowledge or enough power to bend reality can steal money from people with gambling addiction. Automating your addiction might not be the best move.
  - nkrisc 5mo ago
    This is what markets like Polymarket boil down to. Normies can't win. Some will, of course, but that's just chance and there's no way if ensuring it's you. It's really no different than a casino: if you ever find yourself with more money than you walked in with, cash out and leave. Best strategy for most people though is to simply not participate and you'll break even.
    - Bratmon 5mo ago
      You say that like it's bad thing, but really it's great! It gives us normies a way to see what the powerful are thinking.
      - kelvinjps10 5mo ago
        normies that don't enter the game, because the ones that do just loose their money
    - conductr 5mo ago
      Except, the thing is, a decent portion of the population enjoys throwing money away in casinos. If they feel a similar level of enjoyment/entertainment from this type of market, then it's no different and they're playing for a non-financial purpose that your calculus isn't pricing in. Maybe a stretch but theoretically, if they enjoy it enough, it can serve as a much cheaper alternative to a casino and thus could actually have a positive net return to one's personal finances even while losing. And, I'm not even contemplating gambling addiction. There's a huge market of people that just go to Vegas once or twice a year and come home thousands of dollars poorer. But they don't need it, they may not gamble outside of Vegas, or nothing that would signal an addiction.
      - JumpCrisscross 5mo ago
        > If they feel a similar level of enjoyment/entertainment from this type of market, then it's no different If Polymarket were regulated like a casino, I’d actually have no problem with it.
      - kelvinjps10 5mo ago
        how can it be cheaper? people will spend the same amount or even more considering that is more easy to spend more since it's digital
        conductr 5mo ago
        It's all hypothetical of course but I know Vegas has some high table/game minimums and these markets can be pretty cheap if you just want a piece of action. Also, eliminates the cost of actually traveling. Again, no idea if anyone sees this as a true substitute or not. My guess is not as Polymarket bets don't feel entertaining at all (IMO). So it's not filling that void for anyone, but it hypothetically could.
      - cryptonym 5mo ago
        > I don't have a gambling addiction, I just enjoy throwing money away in casinos. I come home thousands of dollars poorer. It's a net return to my finances. Totally healthy. Weird way to validate polymarket.
    - cryptonym 5mo ago
      I fully agree with not participating and would go even further: it's far worse than a casino, which was already bad. It's not regulated. It has a stronger impact on the outside world. With bets you can put a target on people job or head.
- Spooky23 5mo ago
  You're thinking like an engineer and making the laughable assumption that "prediction markets" are markets. It's totally unregulated with all sorts of grifts and cheats. One of the platforms was promoting a high-return bet against Rory at the Masters yesterday. You can make money off of all sorts of stuff. You can "sell" the bets, so there's lots of live pump and dump. We've gone full circle. The bookie with no neck that smelled like onions was more honest than these platforms.
  - HWR_14 5mo ago
    Wouldn't a high-return bet against Rory make sense? He was very likely to win.
    - Spooky23 5mo ago
      Sure. But isn’t weird the betting platform is sending an app notification saying “hey bet on this dude to win $X”?
jazzpush2 5mo ago
Well, that's why things aren't priced uniformly, isn't it?
suzzer99 5mo ago
My general observation is that people tend to underestimate the likelihood of black swan events (covid, financial crisis) even as it's pretty obvious they're happening. And then when they do accept it, they react too far the other way and assume it's never going to end. I've had success playing the markets in these specific cases. I did fritter away a lot of my gains from the financial crisis thinking I was a genius market timer. But I learned my lesson and didn't waver once I jumped back in after covid. In both cases I got out before a bulk of the crash and timed the bottom almost to the day. Lucky I know, but I had reasons for both. For the financial crisis it was when Bill Fleckenstein closed his bear fund and put it all in MSFT. For covid it was when it looked like the lockdown was working and NYC hospitals weren't going to completely fall over like Northern Italy or Wuhan. For any non black-swan scenarios, I assume I'll never get one up on the masters of the universe and just leave everything in blended age-appropriate funds. I'm very concerned about an AI crash and the future of white collar work in general. But it feels more like a slow death to me than a black swan. So I'm just hedging with bonds and cash and stocks that hopefully don't crash as hard in a recession.
- recursivecaveat 5mo ago
  I would also not want to take even a fair bet against black swan because the day that "S&P500 falls to lowest level since 2016 as Labubus collapse" is the headline is the exact day I least want to lose a big pile of money gambling. If it's the shareholder's money though.... I'm probably getting laid off in that scenario anyways...
- chairmansteve 5mo ago
  I make similar bets. The SAAS "apocalypse" looks like a buying opportunity to me.
- bredren 5mo ago
  They underestimate the likelihood of black swan because it is very hard for adults to concretely imagine things that have not happened before and then even temporarily fully believe ~"dreams will come true." One of my go-tos on this is the Fukushima nuclear accident. IIUC there were plenty of folks in Japan who knew of the high risk. Perhaps many interested in nuclear energy outside of Japan, too. But the average adult if asked about the prospect of a major nuclear incident occurring say, "tomorrow," would narrow their eyes in skepticism. There's almost an instinctual level seeding of doubt. This can be a good thing. LK-99 was an excellent test of the dissonance from dramatic changes in reality and costs of inaccuracy. The greatest VCs I have known are exceptional at suspending disbelief to test their ability to basically shape world building.
some_random 5mo ago
The problem with that thesis is that this doesn't seem to actually work as a strategy

nemomarx 5mo ago

This makes sense to me, but isn't there a risk of increasing the potential payoff high enough that someone is motivated to go out and make the yes side happen? Consider this bot running on us military outcomes or something.

cryptonym 5mo ago
By design it's a game where people with inside knowledge or enough power to bend reality can steal money from people with gambling addiction. Automating your addiction might not be the best move.
- nkrisc 5mo ago
  This is what markets like Polymarket boil down to. Normies can't win. Some will, of course, but that's just chance and there's no way if ensuring it's you. It's really no different than a casino: if you ever find yourself with more money than you walked in with, cash out and leave. Best strategy for most people though is to simply not participate and you'll break even.
  - Bratmon 5mo ago
    You say that like it's bad thing, but really it's great! It gives us normies a way to see what the powerful are thinking.
    - kelvinjps10 5mo ago
      normies that don't enter the game, because the ones that do just loose their money
  - conductr 5mo ago
    Except, the thing is, a decent portion of the population enjoys throwing money away in casinos. If they feel a similar level of enjoyment/entertainment from this type of market, then it's no different and they're playing for a non-financial purpose that your calculus isn't pricing in. Maybe a stretch but theoretically, if they enjoy it enough, it can serve as a much cheaper alternative to a casino and thus could actually have a positive net return to one's personal finances even while losing. And, I'm not even contemplating gambling addiction. There's a huge market of people that just go to Vegas once or twice a year and come home thousands of dollars poorer. But they don't need it, they may not gamble outside of Vegas, or nothing that would signal an addiction.
    - JumpCrisscross 5mo ago
      > If they feel a similar level of enjoyment/entertainment from this type of market, then it's no different If Polymarket were regulated like a casino, I’d actually have no problem with it.
    - kelvinjps10 5mo ago
      how can it be cheaper? people will spend the same amount or even more considering that is more easy to spend more since it's digital
      - conductr 5mo ago
        It's all hypothetical of course but I know Vegas has some high table/game minimums and these markets can be pretty cheap if you just want a piece of action. Also, eliminates the cost of actually traveling. Again, no idea if anyone sees this as a true substitute or not. My guess is not as Polymarket bets don't feel entertaining at all (IMO). So it's not filling that void for anyone, but it hypothetically could.
    - cryptonym 5mo ago
      > I don't have a gambling addiction, I just enjoy throwing money away in casinos. I come home thousands of dollars poorer. It's a net return to my finances. Totally healthy. Weird way to validate polymarket.
  - cryptonym 5mo ago
    I fully agree with not participating and would go even further: it's far worse than a casino, which was already bad. It's not regulated. It has a stronger impact on the outside world. With bets you can put a target on people job or head.
Spooky23 5mo ago
You're thinking like an engineer and making the laughable assumption that "prediction markets" are markets. It's totally unregulated with all sorts of grifts and cheats. One of the platforms was promoting a high-return bet against Rory at the Masters yesterday. You can make money off of all sorts of stuff. You can "sell" the bets, so there's lots of live pump and dump. We've gone full circle. The bookie with no neck that smelled like onions was more honest than these platforms.
- HWR_14 5mo ago
  Wouldn't a high-return bet against Rory make sense? He was very likely to win.
  - Spooky23 5mo ago
    Sure. But isn’t weird the betting platform is sending an app notification saying “hey bet on this dude to win $X”?

jazzpush2 5mo ago

Well, that's why things aren't priced uniformly, isn't it?

suzzer99 5mo ago

My general observation is that people tend to underestimate the likelihood of black swan events (covid, financial crisis) even as it's pretty obvious they're happening. And then when they do accept it, they react too far the other way and assume it's never going to end. I've had success playing the markets in these specific cases. I did fritter away a lot of my gains from the financial crisis thinking I was a genius market timer. But I learned my lesson and didn't waver once I jumped back in after covid. In both cases I got out before a bulk of the crash and timed the bottom almost to the day. Lucky I know, but I had reasons for both. For the financial crisis it was when Bill Fleckenstein closed his bear fund and put it all in MSFT. For covid it was when it looked like the lockdown was working and NYC hospitals weren't going to completely fall over like Northern Italy or Wuhan. For any non black-swan scenarios, I assume I'll never get one up on the masters of the universe and just leave everything in blended age-appropriate funds. I'm very concerned about an AI crash and the future of white collar work in general. But it feels more like a slow death to me than a black swan. So I'm just hedging with bonds and cash and stocks that hopefully don't crash as hard in a recession.

recursivecaveat 5mo ago
I would also not want to take even a fair bet against black swan because the day that "S&P500 falls to lowest level since 2016 as Labubus collapse" is the headline is the exact day I least want to lose a big pile of money gambling. If it's the shareholder's money though.... I'm probably getting laid off in that scenario anyways...
chairmansteve 5mo ago
I make similar bets. The SAAS "apocalypse" looks like a buying opportunity to me.
bredren 5mo ago
They underestimate the likelihood of black swan because it is very hard for adults to concretely imagine things that have not happened before and then even temporarily fully believe ~"dreams will come true." One of my go-tos on this is the Fukushima nuclear accident. IIUC there were plenty of folks in Japan who knew of the high risk. Perhaps many interested in nuclear energy outside of Japan, too. But the average adult if asked about the prospect of a major nuclear incident occurring say, "tomorrow," would narrow their eyes in skepticism. There's almost an instinctual level seeding of doubt. This can be a good thing. LK-99 was an excellent test of the dissonance from dramatic changes in reality and costs of inaccuracy. The greatest VCs I have known are exceptional at suspending disbelief to test their ability to basically shape world building.

some_random 5mo ago

The problem with that thesis is that this doesn't seem to actually work as a strategy