this post was submitted on 06 Jul 2026
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It's interesting how prediction markets were kind of sold as this benefit to society because it was a way to tap into the collective reasoning. But then it just got gained by cheaters because that's mostly what people do it seems
What's the logic behind tapping into collective reasoning and how is it (supposedly) beneficial?
I think the supposed logic is that if you average everyone's predictions together you'll be pretty close to accurate. Similar to how a crowd of people sing with near perfect pitch even though any individual in that crowd isn't. However, this runs head first into Goodhart's Law and immediately falls apart
So the assumption is that, on average, people intuitively know the truth? I think this falls apart the second you look at all the disinformation, common misconceptions, biases and all. There's a bunch of fallacies named after gambling, because people can't be trusted to be rational. I'm not sure how crowdsourcing their guesses should correct that.
If I got a bonus every time I saw someone running up against Goodhart's Law, the quality of my customers' analytics would nosedive.
I love this adage as much as I hate "If you can't measure it, you can't manage it". That sentence is simultaneously half the reason my job exists and the reason for half the bogus requests I deal with.
I don't see how it's anything other than regular old gambling.
Betting against others always encourages deception and manipulation. You want to make your odds as favourable as possible while trying to make them look bad so others bet against you.
That makes it worse than, say, slot machines, where you're really only cheating yourself.