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When do prophets profit in prediction markets?

Gu, Anri et al.
arXiv (All) · Papers
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and-scienceartificial-intelligencecomputational-engineeringcomputer-science-and-game-theoryfinance
Prediction markets aggregate dispersed beliefs into prices that act as probabilistic forecasts of uncertain events. Classical theory establishes how a better-than-market forecast can yield positive trading profit. However, it hinges crucially on the specific automated market maker (AMM) design, and
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