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How To Stop Prediction Market Manipulation
In November I wrote an article arguing that prediction markets like Intrade -- where users can bet on the odds of, say, Obama or Romney becoming president -- were a useful tool for aggregating the wisdom of crowds, but could be manipulated by someone placing a large bet in order to create the illusion that "the markets" were favoring their candidate. If the fake "market odds" were reported in the news, it could have the effect of causing more supporters to switch to that candidate, thus increasing the true odds of their victory and creating a self-fulfilling prophecy before the markets had the chance to correct themselves. The solution, I thought at first, was to have a cap on the amount that individual users could bet (which is one of the rules at the Iowa Electronic Markets), and make it illegal for a single mastermind to pay large numbers of third parties to make bets in order to circumvent the single-bettor limit.
As I admitted in a follow-up article, it turns out this regulation would not work after all. The problem is that as long as long as overseas betting markets like Intrade have no limit on wagers, a market manipulator could place a huge bet on Intrade to cause the odds to shift on that market -- for example, changing the odds of Obama-to-win from 4:1 to 6:1. Meanwhile, the odds in a domestic prediction market with a betting limit -- call it CappedEx -- would initially stay at their non-manipulated value of 4:1. But then "arbitrage players" could spot the difference in the odds being offered, and make opposing bets in the two markets in a way that would be guaranteed to make a net profit. (The details are spelled out in my last article, but basically, any time two markets are offering different odds of an event happening, you can pick appropriate amounts to bet in the two markets so that you're guaranteed a profit whether the event occurs or not.) These arbitrage players would continue making opposing bets in the two markets until the odds being offered in the two markets converged onto the same value -- at which point, the market manipulator has successfully manipulated the odds in the capped market, even without ever placing a bet there. Essentially, the market manipulator has hired all of those arbitrage players and paid them to make bets on his behalf, but done so indirectly to avoid violating laws against hiring an army of bet-placers.
I should be clear about the two different time frames being discussed here. If a manipulator places a large bet on Intrade, causing the odds on Intrade to diverse significantly from the odds on CappedEx, then the arbitrage players should cause the odds on the two markets to converge to the same value very rapidly -- plausibly in less than one minute. (Whoever spots the difference first, gets guaranteed free money. It would be easy to write a bot that could watch for any divergence in the odds in the two markets, and place guaranteed-profit bets as soon as a gap appeared.) Then, as political observers noticed that the odds have shifted (without any real-world event in the news that could plausibly explain the shift), another wave of bettors would take advantage of the distorted odds, to bet on the side of the event whose odds had been artificially lowered by the market manipulation. (The odds favor making such a bet, although it's not as good as a guaranteed profit.) As enough people made these opportunistic bets, the market odds would correct themselves to their original values. However, this second wave of betting would probably take a few hours, because it requires humans to think critically about the events. (One likely case of manipulation managed to shift the odds for a few minutes for just $20,000, so it's not unreasonable to think that a million dollars or two -- still small change by the standards of presidential candidates, especially when it's not subject to spending limits -- could distort the market for several hours.) The danger is that the market manipulation could cause the odds to shift in the capped market almost instantly, but the market correction would not take place until several hours later, and in that time the damage (in altering people's perceptions, and possibly creating a self-fulfilling prophecy) would already be done.
It didn't seem like there was any obvious solution to this problem. The U.S. government could ban its citizens from betting on foreign uncapped markets, but it would be too easy for a U.S. citizen to coordinate with an overseas partner to place the arbitrage bets together and split the profits. Or the U.S. could try to ban prediction markets entirely (capped or uncapped), but many economists argue that they're a useful tool for assessing the wisdom of crowds to assess the odds of an event. You could ban media reporting on the odds given by prediction markets (to try and avoid the self-fulfilling-prophecy problem), but that would probably be unconstitutional in the U.S., and unenforceable anyway if people could get their news from overseas.
So in my last article I offered up to $100 to be split between readers who came up with the best arguments for how to stop prediction markets, even markets with individual betting limits, from being shifted by manipulators who place large bets on foreign markets and then count on arbitrage players to pass on the effects to the capped markets. (I've offered cash prizes to readers who submit winning ideas before, and it usually doesn't take this long to get to the follow-up and pay out the prizes. Some follow-up articles that I submitted got lost in the editors' spam filters, sigh, and then there were some other articles in the pipeline that had to go out first. If I offer prize money for ideas and you submit a winning idea, normally you'll get your money much faster.)
Before reading any further, you might want to stop and try to think of what you would consider to be the best solution to this problem (even if the prize money has already been allocated), and then compare it to what we came up with.
... And, welcome back. Here's what I think is the best answer so far: For each event that the capped markets allow users to bet on, the capped market should also be required to monitor the odds that any overseas uncapped markets are offering on the same event. Then if there has been any recent time period where the odds on the overseas markets differed significantly from the odds on the domestic market (significantly enough to indicate manipulation -- and, similarly, significantly enough that the difference probably motivated arbitrage players to place bets to close the gap), then the reported odds should appear with a disclaimer saying, "There was a recent divergence in the odds on capped vs. uncapped markets, so the odds displayed here may have been manipulated, and should be regarded skeptically." This would help to avoid the self-fulfilling prophecy problem, if people are less likely to regard the manipulated odds as a reflection of reality.
The key assumption here is that if a real-world event happens that changes the probability of, say, an Obama victory, then the market odds in both the capped and uncapped markets should shift at about the same time to reflect that new probability. On the other hand, if the odds have shifted significantly in only one of those markets, that could be taken as a sign that that market was being manipulated. Arbitrage players would still be free to make opposing bets in the two markets to narrow the gap, so the odds in both the capped and uncapped marketplaces would still change in the short term, but in the regulated capped market, the odds would be reported with a disclaimer that they're not reliable. After a few more hours, opportunistic bettors would make bets taking advantage of the distorted odds, and the market would correct itself.
This idea did not come from any particular reader but came up as the result of the back-and-forth I had with several people.
A few readers also had interesting ideas for regulations that could fix the problem if they could be applied to all markets. For example, Nathan Dykman suggested that in order to wager larger amounts, you would have to wager that your candidate would win by a larger margin (e.g. if you can bet $1,000 that Romney would win by 1 million votes or more, or you could bet $10,000 that Romney would win by 10 million votes or more -- so that large "manipulative" bets would stand out more obviously). Andy Jobe suggested "staggering" bets so that high rollers could only bet large amounts by placing lots of small bets in sequence, paced slowly enough that the market would probably detect the manipulation attempt and start correcting for it, before all of your bets went through. Jonathan Pearson suggested mandating that markets report the number of people making particular bets as well as the market odds, so that single large manipulative bets could be easily spotted. Ben Griffin suggested simply requiring disclosure of large bets by certain people (as he put it, the headline "Saudi Prince believes that Romney will win the election. What does he know that we don't?!" contains more useful information than "Romney's odds of victory looking better at Intrade").
I think these points are all correct, but the problem with all of these ideas is that they only work if all of the relevant markets are regulated. And if you allow that assumption, then the problem becomes trivial -- because you can just require an individual betting cap in all of the markets. On the other hand, if there's at least one market anywhere in the world that is beyond the reach of your regulations, then they don't have to disclose any statistics about their bettors or follow any other rules that you make. Then when a manipulator places a large bet in that unregulated market, when the arbitrage players place their many small corresponding bets in your domestic regulated market, the detection mechanisms described above, won't do anything to stop that -- those bets in your regulated market look like real bets because they are real bets.
By contrast, if you require domestic capped markets to monitor the overseas uncapped markets, and disclose if the uncapped odds have diverged recently from the capped odds, this still works even if the regulations only apply to your domestic capped market. People can still place manipulative bets on foreign markets, but if the media reports the current "market odds" by looking at the capped market, those odds will be harder to manipulate without getting caught, because they'll run a disclaimer if manipulation has been detected recently. (Of course if the media gets their "odds" from the overseas uncapped market, and reports those odds as literal truth even when the domestic capped markets are running a disclaimer saying that those same odds have recently been manipulated, we can't do anything about that. The hope is that news agencies, no matter how lazy they may be, will at least choose to report accurate information if it takes the same effort as reporting inaccurate information, and thus would prefer getting their information from the domestic capped market, where they can easily check if there's a disclaimer saying the odds have been manipulated recently.)
Some interesting points made by other readers:
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Carl Pearson mentioned that if campaigns had to start diverting attention to prediction market manipulation in addition to all of their other business, this might hurt small third-party candidates more than big campaigns -- because smaller campaigns have fewer available resources to put towards handling new kinds of problems. (True, I think, but only if the markets can be manipulated. If they can't be manipulated, and they're just a barometer of what people are thinking will happen, then you don't need to waste campaign time fighting on that front.)
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Michael Mendenhall pointed out that even in a capped market, the cap should be high enough to create a high "signal-to-noise" ratio. If the cap is too low, the market odds will reflect the betting of more uninformed people who use the betting as a low-cost opportunity to cheer for what they think should happen instead of what they think will happen. (On the other hand, if the cap is too high, then the market is too easily to manipulate.)
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Marc Beaupré argued that prediction markets can probably never be stamped out anyway, because anonymous payment protocols like Bitcoin make it possible for crypto-anarchists to place best on unregulated darknets where they can ignore caps and disclosure requirements all they want. I'm not sure that's true (how do you place a bet in an anonymous peer-to-peer market -- who enforces the payment from the loser to the winner, depending on the outcome?) but it actually doesn't change the main thrust of my argument -- you can still have a regulated, capped domestic market, which is where the media could go for accurate information about the current market odds. So a manipulator could throw their Bitcoin money away on an unregulated peer-to-peer betting network, but it wouldn't do them any good.
Splitting the $100 in prize money, all 7 of the readers credited here get $15. There may be a simpler idea that we missed, or a different reason why this proposed idea would not work. Either way, I'm always grateful for the high quality of the comments that get emailed to me as part of these contests. Eventually I'd like to run some article contests for people to email ideas for a follow-up article, but without offering prize money, to see if that affects the quality of the submissions. It would be impossible to run a precisely controlled experiment (because you can't write a single article where half of your readers are eligible to submit ideas for prize money, and the other half are expected to submit ideas for free), but if we run contests for a large number of articles, and about half of those contests involve cash prizes while the other half offer only acknowledgement, it should eventually become clear if there's a difference in the quality of submissions. It may be that, unlike prediction markets, idea-improvement contests work just as well when there's no money involved.
This is a little off-topic, but it looks like the Iowa Electronic Market did unexpectedly poorly with the election this year.
See http://www.pollyvote.com/
"The task of predicting U.S. presidential elections is ideal for demonstrating the usefulness of combining forecasts, as there are a number of different methods that use different sources of information, or process it differently. In addition, it is difficult to judge a priori which component forecast is likely to be most accurate at different times in a campaign. The historical track record of single models or methods is usually of little help. A prominent example of this year’s campaign is the Iowa Electronic Vote Share Market (IEM), which provided the most accurate component forecasts in past elections (Graefe et al., 2012). This time, the IEM was among the least accurate of Polly’s constituent forecasts, except for its Election Eve forecasts."
Can I have the short version please? I haven't had any coffee yet.
Nope. The news agencies try to report advertising-selling and ratings-boosting information, not accurate information.
Go green: turn off your refrigerator.
Ordering the sea to retreat.
Every attempt to fix a "fair" market price be it by regulations, loose agreements, through to government or central bank intervention is doomed to fail.
Markets are markets, if someone is prepared to spend (and lose) money to create a temporary distortion there is nothing that can be done about this save for removing the incentives to do so.
"Warning: The surgeon general has determined..."
"Professional driver, closed course, do not attempt"
"May result in loss of principal"
"Ask your doctor"
Creduluous people are going to ignore it, and sceptics already know to take it with a grainof salt.
My opinion, YMMV.
Why does he get more front page exposure?
Seriously, just look at the comments on his last manifesto.
He's a moron looking for a problem where none exists and should be ignored. Do not feed his ego. It's plenty big already.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
When this was on Slashdot before, I and others said this wasn't a real problem and no solution was needs. I'm still convinced this is true. The manipulator would just be wasting their money, so there's no problem to fix. If someone tried it, I'd love to take the easy bet against them. There will always be more people looking to profit by taking a manipulator's bad bet. If we have more manipulators than greedy players, no system is safe.
I know what would stop market manipulation.
Dragging old, rich, white executives out of their offices and streets and publicly caning their hairy bleached white asses, followed by 6-8 years of incarceration in your average shithole prison.
You know, actually punishing them for the crimes they commit.
Novel concept, isn't it?
Why do we have a compelling reason to care why these future prediction markets behave?
your scenario about elections being swung through manipulation of odds on Intrade is based on an assumption that large numbers of voters pay attention to the odds on Intrade and that those odds influence their votes. I'm not sure I believe either to be true.
I suspect your ideas are more applicable to stock markets where thinly traded stocks are in play among day-traders..
One major flaw. You assume that a warning will deter...Stupidity says not to, and greed might make me more likely to try and help the first person manipulate the odds, by maninipulating them even further, allowing the stupid to continue messing up the domestic market (ignoring the warning)
Further, in your example, say Romney announces his running mate is actually which severely boosts his political capital, suddenly, and *expectedly* the odds can change very rapidly. Now you warn users about things that aren't actually things that ought to be warned over, causing them to be more likely to ignore the warnings in the future leading to a vicious cycle of the first problem.
The logic goes like this:
1. Manipulator with a large amount of cash to blow through places a large bet on Intrade and similar sites in favor of a candidate.
2. Media dutifully report that Intrade is giving odds in favor of the preferred candidate.
3. Voters mindlessly vote for whoever does best on Intrade.
The thing is, step 3 is wrong. Very wrong. What your average voter hears when media talking heads are talking about Intrade is "Shut up and tell me how the Knicks did last night!".
I am officially gone from
"I have made this letter longer than usual, because I lack the time to make it short." Blaise Pascall
This guy has two problems. First, he cannot distill his throughts into what the critical issue and solution is so he gives a rambling train-of-thought article. Second, he glosses over what the problem is and doesn't have me convinced there IS a problem.
Not worth the read.
-- MyLongNickName
Someone will manage to manipulate the market for answers to get the prize.
I'm a good cook. I'm a fantastic eater. - Steven Brust
1. Betting market odds mean exactly diddly-squat for the actual election.
2. Your writing is terrible, so even if they betting odds did matter your wall of text would still not be given a shit about.
3. Your ideas are worse than your writing, but that's a repitition of 1.
That you have to pay people to read your garbage and engage with you should be all the hint you need to have worked that out already.
During the first election of Obama there was a Fan of McCain that attempted the manulation. Spending about 1.5 million over 10 days attempting to drive up McCain shares. It failed, look at the data from the period, every time the person placed 150K dollars on McCain, the market bought it up within minutes to the net effect that he lost 1.5 million dollars before giving up.
When an Intrade market is active, and that one was, the market will balance it out!
There is solution to this problem given the constraints. A solution can be found if all of the relevant markets are regulated. The problem can only be attenuated, not eliminated, as it is stated.
Problem solved.
You're actually less likely to vote if your candidate seems to be winning in your state, I don't know how he could be more wrong. This also ignores the fact that spending a large amount of money in others ways, like advertising, actually works.
Why would you want to prevent it? You've got two odds. The odds on the market, and the odds in the real world. Manipulating the odds in the market, doesn't really affect the odds in the real world. It's the myth about betting. If you and I have a bet about a football match, it doesn't affect the outcome. So what if the odds are different? Well over time, those that persistently get the odds the wrong way round, lose money, and so reduce their bets or stop playing. With no people to take the other side of the bet, at the odds they want, the odds change to reduce the profit to those who were making money. If the odds go the other way from the real odds, then the other side starts winning. Think of it as an evolutionary process. As a long term game, the odds will converge to the real odds. Check up on the prisoner's diliema. There are different stratageies when you are playing N games, where N is played in advance, compared to an unlimited number of games. You're just considering a single game, and its a special case that doesn't apply to the real world.
Hey, can I still get in on that Obama vs Romney thing? I mean, sure, the odds have gotten worse for Romney since November, but just think of the payout if he wins!
Now if you'll excuse me, I have to go buy my weekly Megabucks tickets - Remember, "You can't win if you don't play!"
There's a thing called reputation. If the reputation of these prediction markets is that they are manipulated then no on will trust them.
If a news outlet takes information from these manipulated markets, knowing they are manipulated, then that network was really just arbitrarily picking up pieces of data that appear to support whichever political party that station is allied to. They would have found anything that works to support their dialog.
By definition large manipulative bets would be outliers. Calculate the odds by reducing the weight of the outliers and provide both weighted and unweighted odds to the participants.
On the other hand, if the odds have shifted significantly in only one of those markets, that could be taken as a sign that that market was being manipulated.
Or, y'know, maybe it just reflects the fact that Americans have a teensy bit more input into who becomes the next president of the US than, say, Germans?
Hire someone to figure it out. You aren't paying us enough to figure it out for you.
Let's hold up a bit. Whether or not he's wrong, I think the type of thinking he does is useful here.
Our entire society is detail-obsessed and linear thinking obsessed. Hazelton offers another view, which is a top-down analysis based on a high level of abstraction. If new ideas are going to emerge, they're going to come from this process, not more churning through details based on past precedent.
I think what he's doing here is quite valid. Markets need some regulation; that's clear, and as much as I'd like to agree with my libertarian friends, I can't stomach the idea of a world following the ethics of fast food and television, which is what would result with pure consumer markets.
However, it's important to make sure that regulation doesn't screw up the process of the markets themselves, and I think Hazelton's analysis here shows a good way to think about that kind of problem.
Whether or not I think he's wrong in this instance has no bearing on the validity of his inquiries as a whole.
One of your solutions is that you would flag bets where there has been a large movement in another market.
First, you would have to figure out all of the explicit angles. For a example, read about “Crack Spreads”. Here, you need to manage 3 or more different predictions that must keep a (mostly) constant ratio. Crude Oil (input) can be made into different combinations of gasoline, diesel, heating oil, etc. If these ratios deviate then there is money. You must identify all of them.
http://en.wikipedia.org/wiki/Crack_spread
Second, you need to figure out the statistically significant angles. You have a bet on the 2012 elections. What if another site offers a bet on who will win Ohio, a critical swing state? Making this bet is almost the same as making your bet. How about the number of house seats that the democrats win? A big turnout for Obama should increase this number. The fit is less tight then Ohio, but still. What is your cut off?
Arbitrage can lead to massive financial losses for those who attempt to manipulate market. See http://en.wikipedia.org/wiki/Cornering_the_market
"as long ago as 1923, Edwin Lefèvre wrote, "very few of the great corners were profitable to the engineers of them."[2] A cornerer can become vulnerable due to the size of the position, especially if the attempt becomes widely known. If the rest of the market senses weakness, it may resist any attempt to artificially drive the market any further by actively taking opposing positions. If the price starts to move against the cornerer, any attempt by the cornerer to sell would likely cause the price to drop substantially. In such a situation, many other parties could profit from the cornerer's need to unwind the position."
Basically, astute investors will punish the manipulator by countering their foolish choices. The result is that these investors will typically be rewarded with financial gains for detecting the error and speeding the market to equillibrium. Meanwhile, the manipulators will sustain heavy financial losses. The greater the manipulation and the greater the disequillibrium, the more investors will smell profit and enter the market to punsh the manipulators.
By capping the market, you are saying that as a socialist central planner you know better ways of helping the market reach equillibrium, than countless competing profit-seeking market participants can.
This raises at least three questions:
1. If you are so smart at helping the market to reach equillibrium, why don't you prove it by throwing your own money into the fray?
2. If you are so smart at regulating the market, why not prove it by competing with other prediction markets who don't regulate in this way, and prove that your forecasts are more accurate than theirs? Can you show your "customers" who use your forecasts that your prediction market is worthwhile?
3. If you are so smart at regulating a prediction market run for profit, why not prove it by attracting more market participants? i.e. will market participants be attracted to your capped market or to one where their profit opportunity for detecting and punishing manipulation is unhampered?
You have an incentive problem. You are trying to harness the profit motivation to create efferent, accurate, predictions. Then you gimp the motivation by placing artificial limits. You are gimping your own system.
Rational agents will try to work around these limits, because any inefficiency that can be overcome is more profit. This can be legitimate – see my post of technical issue – or illegitimate. What’s to stop me from opening multiple accounts? What’s to stop me from hiring 200 offshore persons to run my accounts?
You have 2 choices. You could get into a arms race. Without regulatory powers this is going to be hard.
Or, you could align the incentives up correctly. Large, liquid markets are harder to manipulate than small shallow markets.
Move to a gross receipts tax - say 3%. Every transaction triggers it. Manipulations for short term gains become hopelessly mired in overhead.
You can just mail me the check.
Is it just my observation, or are there way too many stupid people in the world?
Several of the ideas discussed focused on identifying when capped and uncapped markets differ and presume that indicates market manipulation. However, each of these concepts focused on manipulation that was absent a newsworthy trigger. The discussed interventions would fail when a market manipulator simply tied their manipulations to real world news events. A well-funded manipulator could time bets to magnify the impact of candidate A favoring news, and blunt that for candidate B. The arbitrage players would quickly identify that the uncapped market shifted faster towards A and slower towards B, and would begin making predictive arbitrage bets on the capped market in exactly this fashion - working for the manipulator, before the manipulator itself begins to act.
Free Market's a bitch ain't it?
This author should think to himself instead of thinking out loud, and distill his conclusions into something worth reading (or drop it if it's not worth reading.) I can't read very much of this.
Somewhat separately, why is the author holding court, making judgments, and distributing rewards in a discussion forum? Can you imagine people seated in a room, where one person starts handing out treats to people who say things he digs?
Many exchanges use an auction mechanism to prevent this from happening. When a trade is made that is more than x% different from the previous trade, the security goes into "auction mode" for a period of time. During this period all the bids and offers are taken, but only at the end of the auction, using an "uncrossing" algorithm, is a fair price determined for the security. The auction can of course also be manipulated, but you'll need a lot more money to influence the price.
Bennett's supposition is that an uncapped market could be manipulated, and then arbitrage trading between that and a capped market could cause the value of the capped market to swing away from some true value. The problem with this thesis is the assumption that both markets have equal trust. The capped market should be trusted more, and arbitrage trading between the two markets will tend to bring the two prices closer to what the capped market's original value was.
"I'm so moist I'm sticking to the leather." -Kermit the Frog on The Late Late Show
Actually, what it actually relies on is that a small-number of opinion leaders in media pay attention to Intrade, and that a large number of voters are subject to influence by the same small number of opinion leaders in media.
Well, the logic you present is inaccurate (at least as to the general argument for prediction markets influencing results; I'm not going to bother going back through Haselton's earlier post to see if he ever explicitly presented logic for his perception and what that logic is). The general argument is more subtle, and instead of #2 being that the media just reports the bare fact of the Intrade standings, that the Intrade standings influence the overall amount and positivity of coverage the media provides to the candidate, and in #3 instead of voters simply voting based on reported Intrade ratings, increases in the quantity and favorability of media coverage tend, on balance, to produce better results for candidates, all other things being equal.
Get more people involved in the market. The bigger it is, the harder it is to manipulate.
We need votes from the many, not from the few.
During the run-up to the election. . . when EVERYONE was saying that it was Romney's to lose. I kept referring to Intrade, which consistently showed that Romney NEVER had a snowball's chance.
Yet EVERY major news outlet, was Romeny Romney Romney 24x7 after the first debate; and then after 47%-gate, only a few begrudgingly accepted that Obama was going to win. (if I'm recalling my order of events properly) - but specifically, it was really like the final two weeks where everyone was just perplexed at how the polls were shifting to Romney - (they were wrong) and Intrade was showing a narrowing gap, but it was clearly still Obama's race.
They never accepted this reality until the returns were coming back at 5pm. And I *knew* that it was possible that Intrade could be "gamed" - but I always kind of figured it would be the OTHER team with the resources to do that.
But NOBODY in the popular press ever once cited Intrade. It was as if it did not exist at all. And they were right, by God. And afterwards, when they were sweeping up the pieces and trying to point fingers and figure out WHY they were wrong, they STILL didn't look at the obvious signs. I just don't get why this was soooo under the radar.
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
Instead of re-inventing the wheel, use the same mechanism that stock markets use: if the price moves too much in a short period of time, a circuit breaker cuts in and suspends trading. It both stops the market getting skewed and signals that there's a problem.
If you are going to put a cap in place, how about a cap of "one person, one vote"? You know, kind of like the polling that has been done for a very long time?
If you want some kind of "vote with dollars" so you vote more based on how "confident" you are there is no such thing as market manipulation. A person willing to sink a huge amount of resources into a particular candidate represents an intensity of support. Or more accurately is represents a real pool of resources for the candidate. There is no market manipulation possible it is supposed to be part of the process, only a too small pool of participants, a fault of the market itself.
The most basic problem with this in elections is that 100 dollars doesn't mean the same thing to a Millionaire and Fast Food worker, yet on election day they both get one vote. And failing to understand the Fast Food worker was more likely to give time to the candidate rather than money.
re-instate the uptick rule. simple as that
He's wrong because he ignores the 'do nothing' option to the non-problem he posts.
It's not wrong to think about it. He's wrong to not examine the validity of his premise.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
The thing is that a large bet does not necessarily mean a manipulation event. It can also be reflective of new information, or percieved information (ie random).
If the marketplace, rather than then actors on the marketplace, attempts to counter large bets as if they were manipulations by default, they become part of the problem, not a solution to the problem, because if a large bet actually represents new information, and the marketplace tries to counteract it in any way, then it is the marketplace who is doing the price manipulation.