Lumifer comments on PredictIt, a prediction market out of New Zealand, now in beta. - Less Wrong

15 Post author: Jayson_Virissimo 16 March 2015 02:02AM

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Comment author: Vulture 18 March 2015 02:11:14PM *  1 point [-]

The market isn't particularly efficient. For example, if you bought "No" on all the presidential candidates to win, it would cost $16.16, but would be worth at least $17 for a 5% gain. Of course, after paying the 10% fee on profits and 5% withdrawal fee you would be left with a loss, which is why this opportunity still exists.

Does this affect the accuracy of the market? Serious question; I do not understand the nitty-gritty economics very well.

Comment author: Lumifer 18 March 2015 02:45:59PM 3 points [-]

It directly affects your error estimates. If by "accuracy" you mean "forecasting capability" then inefficiency is a symptom of underlying problems (e.g. too few market participants) which do affect accuracy.

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