“That’s the Point”: Evaluating the FUNCTION ARGUMENT for Insider Trading in Prediction Markets

Parallel session

Parallel session 4

Presentation slot

Track

Track 4: Technology and Solidarity

Presenter

Layla Williams is a PhD candidate finishing her dissertation in philosophy at the University of Oklahoma. She works on applied social epistemology including problems in misbelief and epistemic responsibility. Her dissertation investigates the ways conspiracy theorists harm their epistemic environments. Her work on prediction markets looks at the epistemic and ethical implications of the way these markets use and produce information. She also has a background in the Scholarship of Teaching and Learning (SoTL).

Type of presentation

Single paper

Chair

Aliah Yacoub

Aliah Yacoub is a PhD candidate in Philosophy at Utrecht University, where she is part of the Ethics of Socially Disruptive Technologies (ESDiT) programme. Her research examines how emerging technologies transform our social practices, moral concepts, and normative understandings. Her doctoral project focuses on the relationship between technological disruption and solidarity, exploring how technologies such as large language models, digital labour platforms, and content moderation systems shape the conditions under which solidarity is experienced and practised. More broadly, her work engages with conceptual disruption in the ethics of technology, with particular interests in the phenomenology of social relations, the nature of solidarity, and the ethical and political implications of technological change. She previously worked in AI ethics and is interested in bringing philosophical inquiry into dialogue with contemporary technological developments and their social consequences.

Room

Quantum 4

Abstract

Future prediction markets (FPMs) have recently expanded beyond academic and experimental settings into high-profile public platforms, informing political forecasting, economic expectations, and policy discourse. This expansion has prompted ethical questions about how these markets ought to be structured and governed. Market designers, regulators, and scholars often appeal to the function or purpose of these markets,1 seeing them as fundamentally epistemic institutions intended to aggregate dispersed information and generate accurate, probabilistic forecasts about future events. In light of this, a distinctive justification for insider trading within prediction markets has emerged: if FPMs are fundamentally epistemic institutions, then practices that improve their informational outputs, such as insider trading, may be justified.2 In this paper, we critically assess this function-based approach to justifying insider trading in prediction markets: First, we sketch an initial version of what we call the FUNCTION ARGUMENT for the moral permissibility of insider trading in FPMs. Second, we offer what we take to be the most charitable reconstruction of the argument, refining the premises so as to be minimally committal as possible. Third, we argue that even this amended reconstruction fails. We conclude that appeals to the epistemic function of prediction markets cannot ground a moral justification for insider trading. Proponents of insider trading in FPMs must therefore look beyond functional considerations in order to justify its moral permissibility.