More thoughts on predictive markets

From Patrick Boyle's recent video overview of prediction markets.If you are a retail trader who’s tired of losing money to hedge fund algorithms, you might be tempted to look for an edge.In traditional financial markets, acquiring non-public material information and trading on it will generally result in a conversation with the authorities and eventually a lengthy stay in a federal facility.In prediction markets, however, insider trading is often described by proponents as a feature, not a bug.That’s right—a feature.If we look at recent events, this feature appears to be working remarkably well.Last summer, a Polymarket user operating under the pseudonym Rico Suave 666 made a series of highly precise and highly lucrative bets regarding the exact timing of military strikes in the Middle East.It later turned out that Rico Suave 666 was not just a very astute reader of geopolitical tea leaves. The Israeli government arrested two men, including an army reservist, for allegedly placing…