I am quite confident of the information in my post on the Efficient Market Hypothesis. I am happy to bet on the perp-future trade I described there since it is very safe. I will even give people betting against me a big advantage (1). However today I want to share some thoughts on prediction markets and group epistemics. Unlike the safe bets in my previous post, you can very easily lose money betting on prediction markets. I am including some good live trades.

Real Money Prediction Markets

There are basically two classes of prediction market bets: 'bonds' and 'actual bets'.

Bonds:

Bonds are bets that are close to 100% to payout. Currently, you can get ~3% returns in a month betting that Joe Biden will still be president on April 30th on Polymarket. These bets have been plentiful recently because of 'Maga money' but sometimes non-Maga examples come up. Obviously, this bet is not riskless, especially given there is some counterparty risk from Polymarket going under (though polymarket is supposedly non-custodial so there might be ways to recover funds). However, it is a relatively straightforward bet with quite good returns and might be attractive to some people.

Real Bets:

I should give an example of a live bet I think is good. I would suggest betting on the Olympics on FTX (not available in the USA). https://ftx.com/trade/OLY2021. The best argument is that FTX's probability seems way out of line with other sources: The Good Judgement Project has it as a 98% probability. I find the GJP relatively credible even though I think 98% is too high. Polymarket (2) and Betfair have it at ~92% and 86% probability respectively, although the volume is thin. FTX has it at ~76% with much more volume. However, you can find more considerations in this Twitter thread. The relay has already started. Last time the Olympics was postponed right before the relay began.

Research:

The same rationalist who made ~100K betting on Biden post-election made five figures betting on the above CO2 Market. He noticed that you could access the resolution data early if you changed a url parameter. Given this, he was able to tell the market was going to resolve 'No' before anyone else and make a large amount of money. It is possible such edges will be available in the future if you are clever.

Disclaimer:

Sometimes prices are pretty fair and polymarket has significant fees. A...

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