Real money prediction markets are biased towards outcomes that increase utility of the bettors.
For an example: there is a prediction market on who will win the presidential race, Alice or Bob. Currently the market sits at 50-50 and the payout for $1 on Alice is $2 and the same for Bob. Our bettor, Charlie, has internal odds that are the same as the market, however he also believes with an incredibly high certainty that if Bob wins the race then the buying power of a dollar will double. Therefore $1 on Bob is worth $4 if Bob wins, but the same $1 on Alice will only be worth $2. Because of this Charlie will bet the market all the way to 66-33 favoring Bob. This is despite the fact that his internal probability that Bob wins is only 50-50.
Real money prediction markets are biased towards outcomes that increase utility of the bettors.
For an example: there is a prediction market on who will win the presidential race, Alice or Bob. Currently the market sits at 50-50 and the payout for $1 on Alice is $2 and the same for Bob. Our bettor, Charlie, has internal odds that are the same as the market, however he also believes with an incredibly high certainty that if Bob wins the race then the buying power of a dollar will double. Therefore $1 on Bob is worth $4 if Bob wins, but the same $1 on Alice will only be worth $2. Because of this Charlie will bet the market all the way to 66-33 favoring Bob. This is despite the fact that his internal probability that Bob wins is only 50-50.