Beat me to it. Yes the lesson is perhaps to not create prediction markets that incentivise manipulation of that market towards bad outcomes. The post could be expanded to a better question of, given that prediction markets can incentivise bad behaviour, how can we create prediction markets that incentivise good behaviour?
This reminds me somewhat of the potentially self-fulfilling prophecy of defunding bad actors. E.g. if we expect that global society will react to climate change by ultimately preventing oil companies from extracting and selling their oil field assets. Then those assets are worth much less than their balance sheets claim, so we should divest from oil companies. That reduces the power of oil companies that then makes climate change legislation easier to implement and the prophecy is fulfilled. Here the share price is the prediction market.
Beat me to it. Yes the lesson is perhaps to not create prediction markets that incentivise manipulation of that market towards bad outcomes. The post could be expanded to a better question of, given that prediction markets can incentivise bad behaviour, how can we create prediction markets that incentivise good behaviour?
This reminds me somewhat of the potentially self-fulfilling prophecy of defunding bad actors. E.g. if we expect that global society will react to climate change by ultimately preventing oil companies from extracting and selling their oil field assets. Then those assets are worth much less than their balance sheets claim, so we should divest from oil companies. That reduces the power of oil companies that then makes climate change legislation easier to implement and the prophecy is fulfilled. Here the share price is the prediction market.