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.
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 implying that they are not current important.
“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?
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.
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 implying that they are not current important.
“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).