There is alternative to being “able to predict the future”, which is “I already know the future” or “I can change the future”
replySomeone flips a coin and looks at it, what orders are you willing to put in?
replyThe potential for insiders should be represented by a complete loss of liquidity.
And yet, many people bet on things like the duration or contents of press conferences, of pre-taped shows, etc.
replyThere are some bets on prediction markets where the future is either already known or in the control of people who may be participating in the market. For example, when people bet on how long the next presidential briefing will be, it doesn't take a prophet to predict this, anyone who organizes said briefing can control it (at least with a very high probability).
replySo, the question becomes "what is the preponderence of such bets" and "how many people with control or knowledge of bet outcomes actually participate in the market" - not "can some people see the future of any bet better than others".
"predicting the future" and "correct analysis of all available information" often aren't all that different.
replyA sufficiently large market is indistinguishable from Brownian motion.
replyThat's a model.
replyFrom Schlock Mercenary (quoted from memory, may be inexact):
reply"You cannot see the future. All we are given is the present."
"Of course. But if you look closely at the present, you can find loose bits of the future just laying around."
Not really. Not all players in prediction markets are rational players. A good chunk of it are there for entertainment, and analyze things incorrectly; you can take the other side of those trades, and you won't need to predict the future.
replyDeciding that someone else's prediction is wrong is a prediction in and of itself.
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replyYes, but the alternative (that some people are very good at forecasting) is also plausible. It's also useful to have a good prediction model and timely data sources when providing liquidity. We also find that some of the "biggest losers" also provide liquidity; they just aren't as good at it.
replyThe stock market is arguably zero sum as well, just that directionally betting on the US has generally worked during the golden years of the US economy.
replyThe stock markets of the world aren't a money printer.
They can be in cases where investment lenders don’t have 100% capital requirements, but that’s generally no different from other banks.
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