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.
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.