Why Prediction Markets Beat The Experts
At 11:54pm Polymarket showed a 95% chance of Trump winning while CNN and Fox were still calling it "too close to call."
2025-03-06 02:00:00 - Art of the Problem
This wasn't unusual - betting markets have often outperformed polls and experts throughout history.
So what should you trust more - the polls or the money? And can we trust something that money can manipulate?
In this video, we explore how prediction markets work, from insurance to sports betting to elections. We'll see how the "wisdom of crowds" (like in Galton's Ox experiment) can produce surprisingly accurate forecasts, why prediction markets correctly called 15 straight US elections, and how these markets efficiently translate collective knowledge into price signals.
We'll examine price discovery mechanisms, risk assessment through market prices, and how information economics helps us understand the difference between probability and price. Whether prediction markets are providing "weather for everything" or potentially reshaping economic forecasting and decision-making, when markets take control, what could possibly go wrong?