Losing is fun
Will Kalshi and Polymarket lose users as they realize insiders tend to win? I'd bet against it
Back in the bad old days of crypto trading, when there were hardly enough buyers and sellers out there to repopulate an American ghost town, a once major exchange called Poloniex had a feature called the “troll box.” In the troll box, users could discuss their trades and their perspectives on trading with each other.
As one redditor described it, “It looks like pack of ranting teenagers on steroids.”
The wisdom of crowds!
A new paper has evaluated Polymarket, the world’s largest prediction market, and found that it their accuracy does not come from lots of users. Their accuracy comes from a few highly informed traders (just 3% of them).
The authors don’t offer an upshot for their research, but I think it’s implied that people participating in prediction markets are suckers. Or, as the authors put it:
“Prediction markets are remarkably accurate, but the source of this accuracy is not the crowd.”
Does playing prediction markets and losing money actually make bettors losers, though?
Could pe…