Cognitive Bias Scanner

Overview

This pillar systematically checks if a market's price reflects common psychological traps like recency bias, anchoring, or the favorite-longshot bias. It's valuable for identifying when herd mentality and irrationality have created a mispriced opportunity.

What It Does

The scanner analyzes market price action, media volume, and historical odds to detect patterns indicative of specific cognitive biases. It flags markets where recent news has a disproportionate impact or where low-probability longshots are systematically overvalued. The pillar then generates a composite score indicating the market's vulnerability to irrational pricing.

Why It Matters

Markets are composed of humans who make predictable errors in judgment. This pillar provides a contrarian edge by flagging when a market's price is driven more by emotion than by fundamental probability, allowing you to bet against the irrational crowd.

How It Works

First, the pillar establishes a baseline probability using historical data from similar markets. It then calculates a 'Narrative Hype Index' by analyzing social media velocity and news volume. Finally, it compares current odds to the baseline, flagging significant deviations that align with known cognitive bias patterns.

Methodology

The core analysis combines three indicators. Recency Bias Weight is calculated by comparing the price impact of news from the last 72 hours versus the last 30 days. Favorite-Longshot Skew compares the implied probability of outcomes below 15% and above 85% to their historical success rates. Narrative Hype Index is a 0-100 score derived from social media mention velocity and sentiment analysis.

Edge & Advantage

It provides a systematic, data-driven method to profit from common human errors that emotional traders and narrative-driven participants consistently overlook.

Key Indicators

• Recency Bias Weight

  high

  Measures the disproportionate influence of recent news on market prices, flagging when short-term events overshadow fundamentals.

• Favorite-Longshot Skew

  high

  Identifies the tendency for markets to overvalue low-probability outcomes and undervalue high-probability favorites.

• Narrative Hype Index

  medium

  Quantifies the level of media and social media attention, signaling when a story, not data, is driving the price.

Data Sources

• GDELT Project

  Provides global news event data to track media volume and narrative velocity.

• Social Media APIs (e.g., X/Twitter)

  Monitors conversation volume and velocity to gauge public hype and sentiment around a market.

• Historical Odds Archives

  Provides past market data to establish baseline probabilities and identify historical pricing biases.

Example Questions This Pillar Answers

• → Will Candidate X win the next presidential election?
• → Will 'Movie Y' win the Oscar for Best Picture?
• → Will Bitcoin reach $100,000 by the end of the year?

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