Are there differences between prediction and markets that make it easier for a "smart bias-educated person" to win fairly easily?
Besides what Nick said, people seem to treat prediction markets more as entertainment than seriously. For example, Ron Paul or Al Gore should never have broken 1%, and Hillary shares were high long after it became obvious she wasn't going to make the nomination. These were all pretty clear to anyone suspicious of fanciful wouldn't-it-be-fun? scenarios and being biased towards what one would like to happen.
If you think its fairly easy, then I'd be curious to know whether you're putting your money where your mouth is... how much have you invested?
I started in the IEM with ~$20, and even after taking some heavy losses in 2004 and whatever fee the IEM charged ($5?), I still cashed out $38 in 2008. If you're interested in more details, see my http://www.gwern.net/Prediction%20markets
I appreciate your careful documentation. And I thought these words of yours were wise: "I often use them [prediction markets] to sanity-check myself by asking 'If I disagree, what special knowledge do I have?' Often I have none."
Words are vague, lets use numbers. Say you were forced to invest $1000 in the prediction markets over the next year. What probability would you assign various outcomes: e.g. [-100%,-50%], [-50%,-25%] [-25%,-10%], [-10%,0] [0,10%], [10%,25%] [25%, 50%], [50%,100%], [100%, 200%], and [200%, 1000000%]
Here's our place to discuss Less Wrong topics that have not appeared in recent posts. Have fun building smaller brains inside of your brains (or not, as you please).