Clayton

who knows this man 👀? hint: he proposed the logarithmic market scoring rule

it's US midterm election day, and you will see a lot of screenshots today saying a party has a 73% chance here is what that number actually means, because most people read it wrong a 73% price on a prediction market means the crowd is paying 73 cents for a share that pays $1 if that outcome happens that is the market's best collective guess, not a promise and it can absolute change now let's flip it if one side is at 73c, the other side is priced near 27c a 27cent outcome happens about 1 time in 4 So when a market favoured one side and the other side wins, the market was not automatically broken the real way to judge a market is not one race, It is over hundreds of calls if everything priced at 73c wins about 73% of the time, the market is well calibrated, even though the 27c side wins plenty of times along the way even a 18c side can win, as we saw in the Brazil Presidential case (Lula) so three more things to remember tonight ⤷ prices move fast as results come in ⤷ thin markets can be pushed around by one big order ⤷ always check depth, not just the headline number happy predicting on this day :)