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Add note about stable odds in parimutuel
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maltekliemann committed Nov 17, 2023
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Expand Up @@ -64,9 +64,10 @@ on Zeitgeist:
get a 300% payoff if they're right. That's not the case at a parimutuel. If
more people buy your outcome, your payoff gets worse. This makes it impossible
to properly reward traders that have moved the price in the right direction
and have done so early.
and have done so early and incentivizes informants to withhold information
until close to the end of the market.

A particularly vexing symptom of this problem is that, if a market becomes
But a particularly vexing symptom of this problem is that, if a market becomes
trivialized (some outcome $X$ has materialized before the end of the market)
and at least two agents have bet on the winning outcome, then it's a winning
strategy to keep pumping more money into the market to dilute the other
Expand All @@ -77,7 +78,8 @@ on Zeitgeist:
suited for markets which resolve very quickly.

As such, parimutuel markets are perfectly suited for short-lived markets where
the market's outcome is published at a predefined time.
the market's outcome is published at a predefined time or where odds are
considered comparatively stable.

## Parimutuel Markets on Zeitgeist

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