In theory I suspect it just doesn’t actually make sense to have prediction markets where people can bet anonymously. It decreases the transparentization benefits of having the prediction market by like 10x because insider voices will get lost in the crowd. It makes it impossible to protect ordinary traders from insider trading.
And this seems unsolvable. Even if you figure out how to do the dance where traders have the opportunity to respond to an insider bet before prices flip, any approach to deanonymization can be bypassed by insiders proxying their bets through loved ones. You’d also need an exhaustive map of trust relations, and I’m not sure that would even be sufficient.
I might start advocating person to person Wagers over Markets.
https://www.lesswrong.com/posts/6h9p6NZ5RRFvAqWq5/the-summoned-heroine-s-prediction-markets-keep-providing
In theory I suspect it just doesn’t actually make sense to have prediction markets where people can bet anonymously. It decreases the transparentization benefits of having the prediction market by like 10x because insider voices will get lost in the crowd. It makes it impossible to protect ordinary traders from insider trading.
And this seems unsolvable. Even if you figure out how to do the dance where traders have the opportunity to respond to an insider bet before prices flip, any approach to deanonymization can be bypassed by insiders proxying their bets through loved ones. You’d also need an exhaustive map of trust relations, and I’m not sure that would even be sufficient.
I might start advocating person to person Wagers over Markets.