This is a summary of an article originally published by Northeastern Global News
Prediction markets let people bet on real-world events. On platforms like Kalshi, you can win money by betting correctly, and that’s made these markets very popular. Northeastern Global News writes that markets like these can create “perverse incentives” — that once you can profit from an event happening, you now may have a reason to help make it happen.
Professor Chad Lee-Stronach told NGN, “This is what economists call ‘moral hazard,’ where the bets have a causal effect on the world, and people may have incentives to actually bring about those events”. As markets expand into elections, wars, and geopolitical crises, there is rising concern that bettor attitudes towards these important events may become biased by the incentive to win. Professor Rory Smead points out how betting on real-world events may skew our judgement of them: “When we bet on things, we change our attitudes toward them… You can then become invested in something that you might otherwise think is a bad thing, or something that society thinks is bad or wrong.”
Read further at Northeastern Global News
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