> you can still do better buying "risk-free" treasuries.

hm... OK, I guess I see that on Predyx _all the time_. Rarely a good point selling out of a 99% position unless a) liquidity/much better opportunities elsewhere, b) it's far, far out in time

denlillaapan

why would the tails be mispriced like that?

Saliency. There's little additional benefit to being right and much greater risk to being wrong towards the tails.

Just take it to the extreme of a market that is still up despite the outcome being certain. The odds still shouldn't get pushed to 0 or 100 because on the margin you can still do better buying "risk-free" treasuries.

Politics_And_Law

Stacker_Stocks

econ

Prediction Markets and the Wisdom/Madness of Crowds (FT, Michael Mauboussin)

> why would the tails be mispriced like that?

Saliency. There's little additional benefit to being right and much greater risk to being wrong towards the tails.

Just take it to the extreme of a market that is still up despite the outcome being certain. The odds still shouldn't get pushed to 0 or 100 because on the margin you can still do better buying "risk-free" treasuries.