I have a young friend who is a trader on Wall Street. I have tried to interest him in Kalshi, but he’s brushed it off as too small, not relevant. On the weekend, he texted me an image of a tweet about Kalshi’s market on the University Presidents. Then he texted me Bill Ackman’s tweets on the subject. Then he wrote: “this was a layup and I never would have thought to monetize it.” I think we can consider him a convert now.

This matches a widespread swell of social media interest in the past week. 

And the action has been wild. Most traders perceived that Penn’s President was in an unrecoverable position after the Senate testimony and the range was limited to 70%+. MIT’s Sally Kornbluth attracted little action. But Harvard’s Caudine Gay was, and continues to be, the flashpoint of this debate. 

Bill Ackman’s tweets have been influential, in part because he is an alumnus and donor to Harvard, and because he has been vocal on the subject to a large X/Twitter audience. The climb in Harvard’s price followed his strong call for Gay’s dismissal, and the price collapse was precipitated by his tweet that revealed information that the Board would support her. This was confirmed Tuesday morning. Is it over? I don’t think so. The market runs to the end of 2024, and we have election stumping in that period. 

A generation ago, it was a novelty when people started going to Google on their phones to settle small arguments about what happened in the past (who won the Oscar in 1999?).  Now we’re entering the age when people will look up prediction markets to get a greater understanding of the most likely trajectory for the future.  

We’re used to hearing individual prominent voices for guidance on the future. Or we’ve read those “Your Guide to the Markets in 2024” bonus issues that magazines pushed out in December to fill space around holiday advertising. That’s dying. 

We Know They Don’t Know! 

One person’s assessment – or ten people’s – of the future is next to useless, except where that person is a leading specialist in the field (and isn’t talking her book.). 

But the aggregate opinion of people with skin in the game is a different level of information. 

Kalshi started where they had to start – appealing to the people who understand trading and hedging risk. So their markets have predominantly been finance, economics, and related risks. The University Presidents market is different because it’s something that ordinary people have been swept up in, and they have discovered a way to interact with the issue outside of their friend group.

This is exactly what happened with social media and opinion. Everyone suddenly got a larger audience. Prediction Markets give you a larger feedback loop.  They strip out the noise of social media but retain the wide participation. Social media amplifies extreme opinion; prediction markets accentuate educated opinion. In fact, they promote learning. This was captured in a comment on the Kalshi Discord channel last week. It was unrelated to the University Presidents.

Can you have a better endorsement of the social value of prediction markets?

Now imagine that expanded to markets where people can invest in markets which more directly impact their lives. I wrote about this.