.@pratik_makadiya repeats complaints that futarchy "doesn’t provide enough protection against manipulation by a single powerful entity or coalition" & "most people do not have enough sources to find correct and accurate information".https://btcmanager.com/deep-dive-into-futarchy/ …
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And the fact that most people aren't well informed is a common fact that all institutions much face. We have much larger literature on market efficiency suggesting markets compare favorably to all other info institutions.
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If a decision market has the power to enact laws, we have a TON of evidence that manipulating it decreases price accuracy and causes huge problems.
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Have a cite to offer?
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I don’t have a great one off hand but here is one example of the effects of money/incentives influencing the markethttps://www.mercatus.org/expert_commentary/regulatory-capture-what-experts-have-found …
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I'm well aware of regulatory capture. I don't see how that is relevant to claim that traders can effectively manipulate prices in speculative markets.
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Futarchy isn’t just speculative markets, it’s decisions make by market price, no? There’s plenty of evidence that markets have been manipulated by individual traders in the past. https://en.m.wikipedia.org/wiki/Cornering_the_market … cornering the market usually but most markets don’t govern laws.
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Betting markets cannot be cornered, as an unlimited supply is available.
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In my experience this is not true.
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Does this also hold if the manipulators are large compared to the total market participants, though? For things like decision markets to set government policy, perhaps entities like banks would have size&incentive to manipulate beyond what market can fix.
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In real financial markets today, there just are no market traders that big, at least when the whole rest of the world is allowed to trade.
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Seems like decision markets for government decisions might allow traders to have bigger effects on things, which could lead to bigger advantage from manipulating markets vs if it's just financial markets.
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I don't see why you expect traders to have bigger effects here.
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A decision market on government policy seems like it could affect "the rules of the game" (issues like government spending, central bank interest rate, ...) which seem like they would have a much larger effect than traditional manipulation.
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I may be wrong though, but I feel like an analysis of how potential benefits from decision market manipulation differ from potential benefits of traditional market manipulation is missing.
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What if I make a precommitment to make a payout, out of pocket, in exact inverse proportion to the market payout rule, and thereby obliterate any incentive to hold the winning option? In the game, "The bank pays 100 if the suspect is guilty; I pay 100 is he is innocent."
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I don’t think you’ve thought that through.
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Sure, for a binary option, I would need to pay just as much as the market was subsidized with. But (assuming linear payout rule) I can affect the relative expected-value-at-payout(s) proportionately to how much money I can throw into the payout relative to the original subsidy.
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