It sounds like they should be called "indicator markets" rather than "prediction markets", as the data shows they largely just summarize the current knowledge, with little predictive ability.

I tend to go back to this article when I discuss these markets with people https://en.wikipedia.org/wiki/Wisdom_of_the_crowd ... in particular, these markets are designed to tease out the "surprisingly popular" answer https://en.wikipedia.org/wiki/Surprisingly_popular because they incentivize divergence from average response.

Sort of. Putting current knowledge into a number can be pretty interesting / useful though. Like many people, I read headlines and pay attention to what's happening in international politics, but from those it's hard to have any sense of how much reality there is to bluster in Iran/Panama/Venezuela/Greenland just from general discourse and media. For me, prediction markets have been very helpful in offering some sort of grounding beyond the general noise in areas where I have very little intuition or realistic sense of the possibilities.

It's true they are "just" summarizing current knowledge. But there are better and worse summaries of current knowledge!

Some summaries, like on some prediction markets, have objective accuracy that is much better than chance.

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