I think the math works out to be that the variation is much more extreme when you get to much more extreme probabilities. Going from 4% to 8% is 2x profits, but going from 50% to 58% is only 1.16x profits.
This also misses the time value of money; fixed heuristics don’t capture that the effect is more pronounced the further out the settlement date is (already prediction markets with 2030s settlement dates)
Seeing this, I update toward a heuristic of “all polymarket variation within 4 percentage points are noise”.
I think the math works out to be that the variation is much more extreme when you get to much more extreme probabilities. Going from 4% to 8% is 2x profits, but going from 50% to 58% is only 1.16x profits.
This also misses the time value of money; fixed heuristics don’t capture that the effect is more pronounced the further out the settlement date is (already prediction markets with 2030s settlement dates)