Because the people who are consistently right will consistently win money and will make bigger bets which move the price more, in the limit case making the price converge on the true probability of the outcome.

This is the theoretical underpinning of prediction markets.

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lukev 19 hours ago | parent [-]

Equating being "consistently right" with having a sufficiently large stash of capital is ludicrous.

"right" people will wisely take most their winnings out of a high-variance market. "wrong" people with deep pockets (or lots of wrong people with shallow pockets) will continue to distort the market.

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chii 19 hours ago | parent | next [-]

> will continue to distort the market.

they can only do so as long as they have enough capital to lose. Because every time they try to move the betting markets against the truth, they will simply lose that money when the event happens (and turns out they were wrong).

So any distortion will merely be temporary. Unless they have access to unlimited capital of course - which is not true yet for anyone (but the US gov't).

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lukev 5 hours ago | parent [-]

That only makes sense in a hermetically sealed system, which this is very much not.

	▲	krapht 2 hours ago \| parent [-]
		Yes, but is this a problem? Haven't most betting markets turned out to offer accurate predictions?

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SauntSolaire 19 hours ago | parent | prev [-]

Well, the more often you're right, the more capital you will be able to accrue to bet with next time.