Conversation

Prediction markets and the election: The lesson is *not* that prediction markets are more accurate than other sources today. They fluctuated wildly. However, they *are* the key to better predictive power tomorrow. Better models will be created if they can be directly monetized.

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Jeremy Gardner

@Disruptepreneur

Nov 4, 2020

Disagree. Their prices more accurately reflected sentiment in the market than any other source.

Fred Ehrsam

@FEhrsam

Nov 5, 2020

True but tautological: "market prices reflect market sentiment". If I predicted 11% Trump (current market) and didn't change my prediction over the last 24 hrs, that certainly didn't reflect sentiment, but my predictive power was high, and the point is predictive power.

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Prediction market looks very unsophisticated the way it played out, directly correlated with the play-by-play rather than being contrarian or foresighted. Seems like day1 Trump lead followed by day2 Biden gain on mail-in should have been priced in but it wasn’t.

12:26 AM · Nov 5, 2020Twitter for iPhone

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It's the $850 limit for American citizens which turns into a poll tracker.

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Classic pump and dump

John W. |

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"Prediction markets" are not prediction markets. They are volatile instantaneous binary options with low liquidity. Do they predict anything? Not really. Maybe they should be called probability markets.

Jeremy Gardner

@Disruptepreneur

Nov 5, 2020

That’s exactly what a pm provides lol. But there are lots of types of PMs, scalar, combinatorial, etc.

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I will refer to this tweet anyone who thinks something is priced in or being up EMH again.

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1. PM priced in closely contested election for days before the election. 2. 24hr window point you make is more related to Efficient Market Hypothesis. Yes, SPX is more efficient than day 1 IPO, but free markets work (I know you know!). I think PM hands down outperformed polls.