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by rich_sasha
168 days ago
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How much volume on this bet? Let's ignore black swan events and say it's a guaranteed 3% return. On how much? $1? $10? $1m? I'd weigh the accuracy by how much money is at stake... Even then, a "perfect" prediction market need not be accurate, if people use it for hedging. If some low probability event is really bad for me, I may pay over odds (pushing the implied probability up) to get paid if it happens. The equilibrium probability may be efficient, reasonable and biased. |
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