Adjacent: Macro & Assets · Adjacent
Prediction Markets
Markets where prices are probabilities: how event contracts work, why crowds with money at stake forecast well, the Iowa Electronic Markets, Kalshi and Polymarket and their regulation, biases like favorite–longshot, manipulation, and how to trade them with an edge.
Step 1 of 6 · Overview30 min read ·
Key idea
Prereqs: Probability; Expected value for traders. Next: Market regulators: SEC, CFTC, Fed. Sources: Wolfers & Zitzewitz, 'Prediction Markets' (*Journal of Economic Perspectives*, 2004); Robin Hanson's writings; CFTC orders on Kalshi and Polymarket.Next: 1. Mechanics