Prediction Markets
Prices as probabilities, favorite-longshot bias, fees, resolution rules, calibration and venue arbitrage.
·8 min read
The Favorite-Longshot Bias: Decades of Evidence from Betting Markets
**Abstract** The favorite-longshot bias describes a systematic deviation in betting markets where odds imply that longshots are underpriced and favorites are overpriced relative to their actual probability of
·10 min read
Combinatorial and Conditional Markets: Pricing Dependent Events
Combinatorial and conditional markets allow traders to bet on outcomes that depend on other events: not just "Will Biden win?" but "Will Biden win AND unemployment fall below
·9 min read
Liquidity in Prediction Markets: Depth, Spreads, and Why Small Markets Are Hard to Trade
Liquidity in prediction markets reflects the volume and tightness of available buy and sell orders at any given price level—measured by order book depth and bid-ask spreads. Small