Our Research
Thinking on information markets, mechanism design, and the primitives that make them work.
Binary Events: What Happens When You Split One Market Into Twenty
Let's find out how Polymarket handles complex questions by breaking them into multiple yes/no contracts. By examining metadata from the Gamma API, functionSPACE argues that this "fragmented" approach creates a "resolution gap" where liquidity fails to spread evenly across all outcomes.
The Yes Bias Might Not Exist
Polymarket traders have an inherent psychological bias toward "Yes" outcomes. By analyzing over 7,000 events, the researchers discovered that the platform’s editorial tendency to frame questions around dramatic, unlikely scenarios (e.g., "Will a specific event happen?") naturally makes the "Yes" token a cheap long-shot. Their data reveals that traders don't actually care about the "Yes" label; they simply gravity toward cheaper tokens regardless of their name. Consequently, what appears to be a behavioral bias is actually a structural illusion created by price sensitivity and the way markets are designed, where the "No" outcome is the default reality for most unlikely events.
Information as supply
Prediction markets lies not just in trading volume, but in their role as a low-cost "information infrastructure" for real-time probability estimates. While current estimates project a $1 trillion market by absorbing sports betting and financial derivatives, the authors suggest the real "supply-side" unlock—collapsing the cost of accurate forecasting—will create a "long tail" of millions of niche markets. By shifting from centralized apps to open protocols, prediction markets can evolve from entertainment tools into a global layer for decision-making, effectively capturing the massive latent demand currently held by the $418 billion consulting and data industry.