I see people repeatedly make the mistake of referencing a very low liquidity prediction market and using it to make a nontrivial point. Usually the implication when a market is cited is that its number should be taken somewhat seriously, that it's giving us a highly informed probability. Sometimes a market is used to analyze some event that recently occurred; reasoning here looks like "the market on outcome O was trading at X%, then event E happened and the market quickly moved to Y%, thus event E made O less/more likely."
Who do I see make this mistake? Rationalists, both casually and gasp in blog posts. Scott Alexander and Zvi (and I really appreciate their work, seriously!) are guilty of this. I'll give a recent example from each of them.
From Scott's Mantic Monday post on March 2:
> Having Your Own Government Try To Destroy You Is (At Least Temporarily) Good For Business
> On Friday, the Pentagon declared AI company Anthropic a “supply chain risk”, a designation never before given to an American firm. This unprecedented move was seen as an attempt to punish, maybe destroy the company. How effective was it?
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> Anthropic isn’t publicly traded, so we turn to the prediction markets. Ventuals.com has a “perpetual future” on Anthropic stock, a complicated instrument attempting to track the company’s valuation, to be resolved at the IPO. Here’s what they’ve got:
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> Upon the “supply chain risk” designation, predicted value at IPO fell from about $550 billion to $475 billion - then, after a day or two, went back up to $550 billion. No effect!
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> A coarser yes-no Polymarket tells the same story:
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> The chance of Anthropic getting a $500 billion+ valuation in 2026 fell from 90% to 76%, before rebounding to 83%.
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> Why have the markets shrugged off this seemingly important event?
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> Partly it’s because Anthropic seems likely to win on appeal. Hegseth has said the government will keep using Anthropic for the next six months (undermining his case