Comparing related markets helps you check whether prediction market prices are consistent with each other and with basic probability rules.
Mutually Exclusive Outcomes
When only one of several outcomes can happen, their YES prices should add up to roughly $1.00. Large gaps can reflect fees, spreads or thin liquidity.
Nested Questions
If outcome A requires outcome B, A should not be priced higher than B. A candidate winning an election cannot be more likely than winning the nomination first.
Why Gaps Persist
Apparent inconsistencies often have explanations: different resolution rules, dates or low volume. Read the rules before assuming a mispricing.
Worked Example
Three candidates trade at 52¢, 31¢ and 22¢, totalling $1.05. The extra 5¢ partly reflects spreads. A trader notices the third market has little volume, so its price may be less informative than the others.
Key Takeaways
- Exclusive outcomes should sum near $1.00.
- A narrower outcome cannot be likelier than a broader one.
- Check rules and dates before calling a mispricing.
- Low-volume prices carry less information.