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Who wins and who loses in prediction markets? Evidence from Polymarket

papers.ssrn.com

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Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#2

Post by vcf »

We study trading gains and losses on Polymarket, the largest prediction market. Using 588 million trades ($67 billion in volume), we show that the gains are highly concentrated: the top 1% of users capture 76.5% of profits. Successful traders provide liquidity using limit orders that resolve favorably relative to realized outcomes while unsuccessful traders take liquidity using market orders. Monthly performance is weakly persistent, however, this may represent sample selection rather than skill. A detailed analysis of the trading behavior of the most successful accounts suggests that "insider'' trading is unlikely to explain the performance of the largest winners.

Full dataset available at https://huggingface.co/datasets/vgregoire/polymarket-users

Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#5

Post by wutwutwat »

vcf wrote: post #2

We study trading gains and losses on Polymarket, the largest prediction market. Using 588 million trades ($67 billion in volume), we show that the gains are highly concentrated: the top 1% of users capture 76.5% of profits. Successful traders provide liquidity using limit orders that resolve favorably relative to realized outcomes while unsuccessful traders take liquidity using market orders. Monthly performance is w…

insider trading on events probably wouldn't show any trends, right? These are point in time events (they call them markets), but they are finite and short lived. An insider would be a one and done thing, so it would be pretty hard to spot them or trend any sort of month over month insider scheming imo.

Also...

> We study trading gains and losses on Polymarket, the largest prediction market

This is not a natural thing to say and I fucking hate that it's impossible to know anymore if I'm wasting time replying to an AI/bot or not

Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#7

Post by philipwhiuk »

wutwutwat wrote: post #5
vcf wrote: post #2

We study trading gains and losses on Polymarket, the largest prediction market. Using 588 million trades ($67 billion in volume), we show that the gains are highly concentrated: the top 1% of users capture 76.5% of profits. Successful traders provide liquidity using limit orders that resolve favorably relative to realized outcomes while unsuccessful traders take liquidity using market orders. Monthly performance is w…

insider trading on events probably wouldn't show any trends, right? These are point in time events (they call them markets), but they are finite and short lived. An insider would be a one and done thing, so it would be pretty hard to spot them or trend any sort of month over month insider scheming imo. Also... > We study trading gains and losses on Polymarket, the largest prediction market This is not a natural thing…

I agree - you're not going to be an insider on a significant proportion of trades and it would be stupid to use the same account for more than a couple.

Insiders are going to be earning large amounts in single trades, either by betting a lot when it's odds-on or a small amount when it's out the odds (for a large return).

I think it's just bad tense, which I think makes it not AI amusingly.

Re: Who wins and who loses in prediction markets? Evidence from Polymarket

#8

Post by manas96 »

Just curious but how are bets arbritated on these website?

Meaning who decides if an outcome was yes or no? Answers to things like "Who will win the next Best Picture Oscar?" are fairly obvious and binary.

Can we make bets whose answers are not binary yes/no?

What about "Will celebraty X and Y break up?"? Does Polymarket go to X and Y to confirm if they broke up or something :D

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