Matt Levine’s Money Stuff: Sports Bets at the Stock Exchange

Polymarket

You can think about financial markets at different levels of abstraction. Most working traders and analysts spend most of their time thinking at the level of making correct predictions: You analyze some data about the world, form a hypothesis about what some asset prices will do, and test the hypothesis by trading the assets. Often this analysis is informed by experience and connoisseurship and intuitive pattern-matching, though increasingly these days the pattern-matching is done using machine learning techniques.

Then there is the level of adaptive niches: Why do these patterns exist, and why should you be able to ...