This is a reminder of how prediction markets don't always accurately estimate probability of events happening.
The most interesting part of the article IMO was the fact that the 3% probability is artificially high because there is no one willing to take the otherside of the bet, because betting "No" requires you to give your money to the prediction market for 6+ months, and if you're only getting a 1% return if you win the bet, you'll make more money if you put the cash in a high yield savings account.
Seems like prediction/betting markets only really work well when there is a reasonable chance of either outcome occurring, and is less accurate the more obvious one outcome is compared to another?
> This is a reminder of how prediction markets don't always accurately estimate probability of events happening.
I'm well aware that people believe that these markets are accurate estimators of probability of events, but I've (as a life long gambler) always viewed it as a measure of people's confidence in an event happening at a particular probability. People are wrong/delusional at scale all the time (think of the mandela effect), it can be the case that large groups of them converge on the right outcome via market forces, but it kind of makes the big assumption every participant is in good faith, rational, and informed.
I came here to say this, but you explained it better than I could have. At 3% odds, it's not worth it to participate in this market because a money market fund gives a better return, even if you believe the odds of this happening are 0 (and they're never 0, there was a first coming of Jesus after all, you don't have to believe in the supernatural to see how it could happen.)
The most interesting part of the article IMO was the fact that the 3% probability is artificially high because there is no one willing to take the otherside of the bet, because betting "No" requires you to give your money to the prediction market for 6+ months, and if you're only getting a 1% return if you win the bet, you'll make more money if you put the cash in a high yield savings account.
Seems like prediction/betting markets only really work well when there is a reasonable chance of either outcome occurring, and is less accurate the more obvious one outcome is compared to another?