In a recent episode of Hard Fork, the one of the hosts, who attended Manifest, said that Manifolders believe that insider trading shouldn't be illegal:
Kevin Roose
So they actually think that insider information and insider trading is good. Because people with inside information have the best information, and they can bring it to a market. They have some sort of elaborate theoretical underpinning for not believing that insider trading actually should be illegal. Right now, all of this is play money, right? Because of our gambling laws in the US, there are a couple sort of small real-money prediction markets that are very limited, and it’s not worth going into why. But most forms of real-money prediction markets are not legal in the US.
And his co-host later continued:
Casey Newton
You know, I got to say, Kevin, I’m of really mixed mind about this. Because on one hand, the idea of people, like, betting play money to guess what might happen seems totally innocuous. Have a good time. It seems like you had a great time at this conference, seemed like all the other people who were there did, too. But I start to hear things like, well, these folks think that insider trading should be legal, and I just start to think, keep them away from the real economy.
I'm putting forward this poll to get a sense of what Manifolders think of this issue.
Please answer the poll in accordance with your own views about insider trading laws in financial markets.
1,000
3.00@Shrewdan not a perfect analogy, but for some situations it's apt.
I'm the CFO. I know exactly what the earnings report is going to be. Markets are zero-sum games, my winning more directly causes others to lose more. Should I be allowed to use my insider knowledge?
I don't believe insider trading is fundamentally wrong or evil. The problem is that it drives outsiders away and thus lowers liquidity. Probably it lowers liquidity so dramatically that it will get outlawed on all major platforms eventually. (By major platform I'm think of something like a stock exchange, not some niche internet community like Manifold. While this is probably the largest prediction market community now, it is still unknown to the general population.)
I remember reading a story about some tv series predictions. Once some of the staff joined in, the market quickly disappeared. Cannot find the link anymore though.
In other words, my thesis is: Insider trading on stock markets is not illegal because it hurts investors. It is illegal because otherwise nobody would invest anymore and the market disappears.
Still voted for "more lax" because I feel in certain cases (e.g. personal markets) it should still work out.
@marketwise The TV series may have been Survivor, as mentioned in this post linked from the comments of this other post, related to all of this.
@BoltonBailey Yes, thanks! This quote sticks in my mind:
The first season of Survivor, there was a market on who would win. The production crew found out. Then there was no market.