My point of curiosity is if these prerogatives can (or have been) reconciled.
To that end, I'm not sure that these factors are mutually exclusive and would like to hear more of your thoughts.
If I understand you correctly, I would think that a market could have both volume and depth.
With respect to volatility-stability, what do you see as the drivers there? Is it that gamblers would need a significant upside to drive betting? Is this solved by the size of the bet? I suppose there is an internal conflict. If the line of a bet is 49-51% on a binary outcome, the risk of ruin is high, and the upside is low. You would need to aggregate outcomes over many distinct events to mitigate.
I suppose this could hang on ability/inclination of professional forecasters to research and take several positions.
> With respect to volatility-stability, what do you see as the drivers there?
Given two prediction markets, one which varies wildly and one which is stable, the former will attract more users. Particularly the most profitable ones. Even if the underlying odds are unchanging, the volatile market is more “fit.”
I understand the claim, just not the reasoning for why that is the case. Is this driven by human psychology or economics of return? Why is a volatile market more fit?
More people get to feel like winners for longer [1]. And reward uncertainty makes gambling more additive [2].
For purposes of information discovery, volatility is bad. But for purposes of gambling, volatility is good. Running an information-discovery (or financial) platform is less profitable than running a gambling platform. Herego, operators will optimise their prediction markets for gamblers.
Thanks for clarifying. That line of thinking doesnt mean that a discovery planform can't exist. Even if one grants that gambling is more profitable than prediction, markets segment, saturate, and specialize all the time.
> Even if one grants that gambling is more profitable than prediction, markets segment, saturate, and specialize all the time
It's difficult to see the niche for the academic market.
More profit to the gambling platforms means more money for R&D, customer service, user retention and marketing. That means more liquidity. Gamblers means dumb money, which in turn attracts the smart money: if you're commissioning private polling to place more informed bets [1], you want to place a big bet against dumb money.
To that end, I'm not sure that these factors are mutually exclusive and would like to hear more of your thoughts.
If I understand you correctly, I would think that a market could have both volume and depth.
With respect to volatility-stability, what do you see as the drivers there? Is it that gamblers would need a significant upside to drive betting? Is this solved by the size of the bet? I suppose there is an internal conflict. If the line of a bet is 49-51% on a binary outcome, the risk of ruin is high, and the upside is low. You would need to aggregate outcomes over many distinct events to mitigate.
I suppose this could hang on ability/inclination of professional forecasters to research and take several positions.