For decades, people have been saying that the prediction market has the potential to become economically important, yet it remains unimportant. I would not be surprised if it becomes important over the next 4 years thanks to broadly-available AI technology.
Let’s define “economically important” as a state of affairs in which there continues to be at least $50 billion riding on predictions at every instant in time.
First of all, AI tech might make prediction markets better by helping with market-making and arbitrage. Second, a sufficiently robust prediction market might turn out to be the most cost-effective way for an owner of an AI service like ChatGPT to make certain kinds of improvements to the AI service with the result that owners of AI services become a major source of investment in and of revenue for the prediction markets.
“The prediction market”? I am confused what you mean by that.
Prediction markets broadly are now pretty economically important. In the last few years the industry has grown to ~$20B, which is not like, enormous, but pretty sizeable.
$20B in what? Annual revenue (i.e., mostly fees added to transactions) of the companies that run the markets? Assets under management? Amount deposited by traders at a particular moment in time? Valuation of the companies that run the markets?
I should have written, “I wouldn’t be surprised if prediction markets start growing much faster than they have been growing over the last 3 decades or so”, to avoid taking a position on whether they are not currently important.
For decades, people have been saying that the prediction market has the potential to become economically important, yet it remains unimportant. I would not be surprised if it becomes important over the next 4 years thanks to broadly-available AI technology.
Let’s define “economically important” as a state of affairs in which there continues to be at least $50 billion riding on predictions at every instant in time.
First of all, AI tech might make prediction markets better by helping with market-making and arbitrage. Second, a sufficiently robust prediction market might turn out to be the most cost-effective way for an owner of an AI service like ChatGPT to make certain kinds of improvements to the AI service with the result that owners of AI services become a major source of investment in and of revenue for the prediction markets.
“The prediction market”? I am confused what you mean by that.
Prediction markets broadly are now pretty economically important. In the last few years the industry has grown to ~$20B, which is not like, enormous, but pretty sizeable.
I mean a technology and its implementations similar to how “the telephone” refers to a technology.
Ah, that makes sense. I failed to parse it that way! Thanks for clarifying!
Maybe I failed to write something that reasonable people could parse.
$20B in what? Annual revenue (i.e., mostly fees added to transactions) of the companies that run the markets? Assets under management? Amount deposited by traders at a particular moment in time? Valuation of the companies that run the markets?
Valuation of the top companies (based on a random Gemini summary when I searched for it, after a vague sense that things have gotten quite big).
I should have written, “I wouldn’t be surprised if prediction markets start growing much faster than they have been growing over the last 3 decades or so”, to avoid taking a position on whether they are not currently important.