The Prop-Betification of Everything, with the Forefather of Prediction Markets
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What is the main topic discussed in this episode?
Welcome to Pablo Torre Finds Out. I am Pablo Torre, and today we're going to find out what this sound is.
The long-term vision is to financialize everything and create a tradable asset out of any difference in opinion. Right after this ad.
By the way, are you – what is your NHL 26? I don't play anymore because – You don't play anymore? I don't because when the next generation consoles came out, EA for some reason decided to only make the NHL game for the new consoles. And I just never – I haven't bought a new console just because I don't play enough. What was the last console you owned? The Xbox One was the last one. They left you behind in an outmoded technology. Yes, and so I have not played the game in two years, basically. Wait a minute, but the legend of you, the reason I wanted to start with this is because the legend of Jim Zerowicki is not that he used to write the financial page for The New Yorker, worked at Yale, lecturing and all this shit.
It's that you were at your peak. What rank in the world when it comes to the NHL video game? I can't remember exactly, but I think my highest was like 92, something like that. That's ridiculous. Top 100. That's ridiculous. I don't think Megan knows that. I was going to say, God bless your partner, Megan, who is learning the depths. That's not going to be a good thing. That's not good for anyone.
That's not good for anyone.
But there is a bit of a metaphor here already insofar as you're a person who is steeped, it seems, in what was a version of a technology, of a concept, and you're sort of like watching it. this thing that you're as intimately familiar with as anybody, now zoom into a future that I'm trying to also understand. And look, the prediction market's dynamic that I need our audience to understand and that I personally, frankly, need to understand better. The reason you're on this show is because I was looking through PolyMarket's website Okay, and there's a section labeled FAQs, Frequently Asked Questions, and it says polymarket versus polling. And the subhead is, how is polymarket better than traditional slash legacy polling?
And I'll just read this paragraph. Studies show that prediction markets like PolyMarket tend to outperform traditional pollsters because participants are financially incentivized to be correct. This creates more thoughtful, data-driven predictions. Research by James Surowiecki, author of The Wisdom of Crowds, has highlighted how markets like these can be more accurate than polls due to the collective intelligence of diverse participants. My point is that the book that I had to read in college that you wrote, The Wisdom of Crowds, it's kind of the foundational text for the thing that is taking over, not just gambling as a concept, but like now politics and finance and the, what I would say is almost the prop betification of everything.
Yeah.
How does that feel? The fact that I did not trademark the phrase, the wisdom of crowds is one of the great, terrible financial decisions in a lifetime of bad financial decisions, I think. No, it's the thing that... Strikes me, first of all, is kind of what took so long. So The Wizard of Crowds came out in 2004. It was on my Intro to Sociology syllabus, as it is, I think, at fine colleges everywhere. Yeah. There were already a couple of prediction markets that had already been created at that point. They were smaller. One of them was a plain money market, not a real money market. And even the phrase prediction markets was kind of... just being formed. I mean, if you read the book, the phrase I use in a lot of it is decision markets, because a lot of what I was interested in was how you could use these markets to help make better decisions within companies or within governments or whatever.
But there was a lot of interest around prediction markets in the 2000s. There was a huge amount If you go to like 2008, there's this famous open letter that was signed by like 22 of the most really important economists and social scientists in the world, included like five Nobel or four Nobel laureates, basically making the case for prediction markets as a tool that people should be using.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:00–4:53
2
How do prediction markets differ from traditional polling?
4:53–9:18
3
What are the implications of the prop-betification of politics?
9:18–14:19
4
How do prediction markets impact the understanding of public opinion?
14:19–18:13
5
What role does insider information play in prediction markets?
18:13–23:26
6
Why are sports betting and prediction markets intertwined?
23:26–27:47
7
How do financial incentives shape political forecasting?
27:47–32:30
8
What are the potential risks of prediction markets in governance?
32:30–47:13
Speakers
3 identifiedMore from Pablo Torre Finds Out
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