I strongly believe they are a beneficial thing. I can't say they are magical, but they certainly aren't negative in a significant way.

• It's easy to damage reputations by quoting the markets regardless of what they say

• Assuming the market is fairly priced, that certainly should only damage peoples reputation as much as the average of their future exposed actions would deserve. If the market is not fairly priced, then it should have attention brought to it and subsequently be corrected.

• They cause stress to those they are about

• Unfortunately we live in a world with stressors; allowing people an effective way of predicting the likelihood someone cause them stress (e.g. the scandal market resolves yes) is enough more of a public good than the harm caused by an accurate estimation of the likelihood someone causes a scandal.

• Jackson argues that scandal markets might harm the reputations of prediction markets in general

• I don't see why this would be true of scandal markets more than Covid Markets, Geopolitics Markets, Casualty Markets, etc. We more or less have a (survivorship biased, sure) community consensus that the good outweighs the bad through.

Assuming the market is fairly priced, that certainly should only damage peoples reputation as much as the average of their future exposed actions would deserve.

I don't think that's true. The very existence of the market has the potential to do some damage, especially if such a market shows up if someone (not familiar with Manifold etc.) Googles your name.

If the market is not fairly priced, then it should have attention brought to it and subsequently be corrected.

The problem is that if I see someone buy shares in scandal, it's hard to tell if they know something I don't.

allowing people an effective way of predicting the likelihood someone cause them stress (e.g. the scandal market resolves yes) is enough more of a public good than the harm caused by an accurate estimation of the likelihood someone causes a scandal.

This takes as a given that it's effective. I doubt that. Even if they are effective I think it's not obvious that this would be true.

Agree with you on the last thing.

@NathanpmYoung what are your current thoughts/what changed?

the problem with scandal markets is how they often create further scandal and can be targeted haphazardly. the damage they do to their targets and to the platform aren't worth it when they can be wielded against innocents.

I think that the biggest case against scandal markets isn't any of your three bullet points, but rather the idea that scandal markets might drag down all of prediction markets -- scandal markets might themselves become a scandal (like how early attempts to use prediction markets at US intelligence agencies were torpedoed by the accusation of being "terrorism markets"). And in a broader sense, if the #1 application of prediction markets is "exposing the wrongdoing of powerful and influential people", then prediction markets might quickly make a lot of powerful enemies! It is in this sense that I worry that scandal markets might be net-negative. But this doesn't seem to meet your resolution criteria since you might still believe they are a "beneficial way of handling community behavior", even if that good effect comes at the expense of the wider prediction markets / forecasting ecosystem.

@JacksonWagner I'm a bit skeptical that scandal markets are effective in actually getting scandals publicized, since I don't think insider trading is particularly likely or would be noticed. My hesitance with the "powerful people will bring down scandal markets" take is that if a scandal market for a powerful person is high and they get mad, then either they'll have a scandal, in which case it will look good for scandal markets; or there would be money lying on the ground for that powerful person. I mostly believe that scandal markets are likely to be mildly net positive, though they could conceivably be quite net positive or net negative.

@Conflux I think betting down your own scandal market would be a very bad look for a public figure, especially a rich one who can afford to lose a bit of money in expectation in order to shore up their reputation. They could try to do it anonymously, but that's even sketchier (could itself be a scandal if they get caught).