Wouldn’t higher liquidity and lower transaction costs sort this out? Say you have some money tied up in “No, Jesus will not return this year”, but you really want to bet on some other thing. If transaction costs were completely zero then, even if you have your entire net worth tied up in “No Jesus” bets you could still go to a bank, point out you have this more-or-less guaranteed payout on the Jesus market, and you want to borrow against it or sell it to the bank. Then you have money now to spend. This would not in any serious way shift the prices of the “Jesus will return” market because that market is of essentially zero size compared to the size of the banks that will be loaning against or buying the “No” bets.
With low enough transaction costs the time value of money is the same across the whole economy, so buying “yes” shares in Jesus would be competing against a load of other equivalent trades in every other part of the economy. I think selling shares for cash would be one of these, you are expecting loads of people to suddenly want to sell assets for cash in the future, so selling your assets for cash now so you can buy more assets later makes sense.
Wouldn’t higher liquidity and lower transaction costs sort this out? Say you have some money tied up in “No, Jesus will not return this year”, but you really want to bet on some other thing. If transaction costs were completely zero then, even if you have your entire net worth tied up in “No Jesus” bets you could still go to a bank, point out you have this more-or-less guaranteed payout on the Jesus market, and you want to borrow against it or sell it to the bank. Then you have money now to spend. This would not in any serious way shift the prices of the “Jesus will return” market because that market is of essentially zero size compared to the size of the banks that will be loaning against or buying the “No” bets.
With low enough transaction costs the time value of money is the same across the whole economy, so buying “yes” shares in Jesus would be competing against a load of other equivalent trades in every other part of the economy. I think selling shares for cash would be one of these, you are expecting loads of people to suddenly want to sell assets for cash in the future, so selling your assets for cash now so you can buy more assets later makes sense.
The comment above may open a Flood of Jesus-Backed Securities and Jesus-Leveraged Loans. Heavens!