| ▲ | jawiggins an hour ago | |
> longshots lose 6.3 cents per dollar when each contract is weighted equally but gain 4.1 cents when related contracts are first grouped by parent event; the two-sided pattern is robust in Crypto and Politics but surprisingly absent in Sports. This seems like a relatively small inefficiency in the markets, no? If the margin of error notable in a prediction markets is <10 cents per dollar, that implies that they are pricing events pretty accurately. Especially post publication of this paper, when sophisticated traders could trade away this inefficiency. | ||