Insider Asymmetry Detector

Overview

This pillar assesses the asymmetry between public knowledge and private, outcome-determinative information. It helps traders identify and avoid 'lemon' markets where a select group of insiders already knows the result, making it a poor speculate for the public.

What It Does

The Insider Asymmetry Detector analyzes the fundamental structure of a prediction market's question. It identifies if the resolution depends on information held by a small, private group, such as a corporate board, a judging panel, or a closed-door committee. The pillar then quantifies the probability that the market is structurally biased against public participants.

Why It Matters

It provides a crucial defensive edge, helping you preserve capital by steering clear of markets that are effectively unwinnable. By filtering out these sucker positions, you can focus your analysis on markets where skill and public data analysis actually matter.

How It Works

First, the pillar deconstructs the market's resolution criteria to identify the key information needed for settlement. Second, it determines the group of people who possess this information before it becomes public. Finally, it scores the market based on the size of this insider group and the security of the information, generating a risk rating.

Methodology

The core calculation is the Asymmetry Score (AS), where AS = (1 / Insider Group Size) * (Information Secrecy Score / 10). The Insider Group Size is the estimated number of people with pre-resolution knowledge. The Information Secrecy Score (1-10) is a qualitative assessment of how tightly the information is held, with a sealed court verdict being a 10 and a rumored product launch being a 3.

Edge & Advantage

This pillar provides a qualitative filter to avoid capital loss on structurally unfair markets, an edge that quantitative models often miss.

Key Indicators

• Insider Group Size

  high

  The estimated number of individuals who know the outcome before it's public. A smaller group indicates higher risk.

• Information Secrecy

  high

  A score (1-10) of how securely the outcome-determinative information is held prior to public release.

• Asymmetry Score

  medium

  A calculated risk score indicating the likelihood that the market is structurally unfair for public traders.

Data Sources

• Market Resolution Criteria

  The official terms of the market contract, used to identify the source of truth for settlement.

• Public Filings & News Analysis

  Analysis of what is publicly known to determine what information remains private and valuable.

Example Questions This Pillar Answers

• → Will Company X acquire Company Y by the end of the quarter?
• → Will 'The Midnight Hour' win the Oscar for Best Picture?
• → Will the FDA approve 'Drug Z' by its PDUFA date?

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