l’actualité: The economist Geoff Mann’s treatise on prediction markets is worth your time.…
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The economist Geoff Mann’s treatise on prediction markets is worth your time. He details the agrarian history of the futures market and condemns the regulatory environment that has allowed Kalshi and Polymarket to operate as shadow gambling operations in plain sight.
There is an interesting anecdote regarding the purported “father of prediction markets,” George Mason University economist Robin Hanson, and his thoughts on allowing “insider trading” in this space. Hanson has argued that if accurate prices are the goal, “you definitely want to allow insiders to trade,” even if that discourages other people from betting. Taken purely as a comment on extracting the markets’ theoretical value, and not as an endorsement of those in the know profiting from secrets, it’s an interesting idea. Putting aside the immoral and pervasive sports betting that makes up the bulk of transactions, what if platforms like Kalshi really did operate as a place for whistleblowers and leakers to wager on their intel against an unknowing public? Would that be a worthwhile trade for society?
If this were how the markets actually worked, the way the system would dovetail with journalism would be fascinating. Would sources and information be harder or easier to come by? Would breaking news trail the market, or help drive massive shifts in capital?
lrb.co.uk
Geoff Mann · What’s the truth? Prediction Markets