> They're fundamentally broken and the fact that they're allowed is a sign and symptom of a dysfunctional society.
There are two ways to view a market (prediction or stock): as socially accepted gambling for posh elites (and now every wannabe rich), and as a prediction engine that refines people's opinions, beliefs and information into a most accurate estimate possible.
If you take the first view, insider trading is dysfunctional and unfair. If you take the second view, insider trading is the entire point, it's how you get strong signal into the system.
Prediction markets were conceptualized by people taking the second view.
Other insiders and people who think they know better?
For large/complex enough bets, you won't have a single group of people who know how things truly are - you'll have multiple groups of people who each have (or believe they have) a critical piece of the puzzle, possibly by proxy, that makes them think they have a crucial perspective - and those points of view will conflict, giving each such participant a reason to bet. Taken in aggregate, you get a system that pulls in all those perspectives and distills a single signal out of them.
I don't think we have the same understanding of "insider". There are dozens to several hundred insiders at any one time. There aren't enough for them to reliably trade against ones another. To day nothing of how this system would fail when a company decided to raise capital. Like, is the CTO going to trade with the CEO because they have different views on the company? When they need to raise capital, are they going to get it from an accountant at E&Y who's auditing their books?
There are two ways to view a market (prediction or stock): as socially accepted gambling for posh elites (and now every wannabe rich), and as a prediction engine that refines people's opinions, beliefs and information into a most accurate estimate possible.
If you take the first view, insider trading is dysfunctional and unfair. If you take the second view, insider trading is the entire point, it's how you get strong signal into the system.
Prediction markets were conceptualized by people taking the second view.