Study: only ~3% of Polymarket accounts drove most price discovery in 2023-2025, suggesting market accuracy comes from an informed minority, not crowd wisdom
Researchers show market accuracy comes from a tiny group of informed traders, not broad participation. … What to know:
People like me have been behind correctly calibrating all future events. It's been thankless work that's been wrongly attributed to the “crowd” (who are idiots). I'm happy to finally be recognized. You're welcome.
Yes that's the way it has long worked in most financial markets. We could instead directly subsidize such markets, in which case we wouldn't have to tax all those uniformed traders.
I've been on this for a while. “Prediction markets” are just a way for insiders to trade non-public information, which is a problem all its own. The larger issue, however, is that in a society where we've either gamified everything, turned it into a casino or made everything a
Polymarket prices are highly accurate in predicting future events. The source of that accuracy is less obvious. In a new working paper, we find it is not the “wisdom of crowds,” but a small minority of informed traders. Fewer than 3% of accounts appear to drive price discovery; […
(1) yes, this is how markets work (2) rediscovers the pareto principle: obv a small % of people will capture a large % of value (3) how is this “not the wisdom of crowds”? 3% still = 1000s of traders (4) with *only* the informed traders, the market would be far less accurate!