Forecasting basics
Can Prediction Markets Be Wrong?
Yes. This guide explains why market prices can miss, overreact or reflect constraints rather than pure probability.
Educational note: This article explains market structure and probability reading. It is not financial, legal or trading advice.
Markets are estimates
A probability is not a promise. Even a well-calibrated 80% event should fail about one time in five across many comparable cases.
Sources of error
- Low liquidity.
- Ambiguous rules.
- New information arriving late.
- Participant bias or access limits.
- Wide spreads and stale last prices.
Better usage
Treat markets as structured signals. Compare them with base rates, polling, macro data, primary documents and expert models.
Reader checklist: compare the market wording, price, liquidity and resolution source before treating any probability as meaningful.
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