Robin Hansons purity test is based on an absurd principle.

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It&#8217-s not the motivation that is important to assess &#8212-it&#8217-s the liquidity that counts. The more trades, the better. Liquidity leads to statistically accurate probabilities predictions. Liquidity, liquidity, liquidity, doc.

Robin Hanson:

One proposed distinguishing criteria includes the size of an individual trader&#8217-s stake, and the number of traders. The Iowa Electronic Markets are limited on both of these parameters. Such limits do succeed in preventing large hedging markets from masquerading as info-motivated event markets. But they do little to prevent generic gambling markets from masquerading as info-motivated event markets.

Total absurdity.

UPDATE: Robin Hanson comments&#8230-

Again, important for what purpose? The CFTC was clear that they are concerned about how to keep generic gambling from slipping in via whatever they might approve. I was addressing that concern. I don’t see how you can read anything I said as arguing against liquidity.

One thought on “Robin Hansons purity test is based on an absurd principle.

  1. Robin Hanson said:

    Again, important for what purpose?  The CFTC was clear that they are concerned about how to keep generic gambling from slipping in via whatever they might approve.  I was addressing that concern.  I don’t see how you can read anything I said as arguing against liquidity.

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