LVP Research Research on prediction markets and event contracts from Libertas Veritas Prosperitas https://libertasveritasprosperitas.com/research 2026-10-29T00:00:00Z LVP Research Avellaneda–Stoikov on a binary contract: inventory-aware quoting, simulatedhttps://libertasveritasprosperitas.com/research/avellaneda-stoikov-prediction-markets2026-10-29T00:00:00Z2026-10-29T00:00:00ZAdapting the Avellaneda–Stoikov market-making model to binary event contracts: why p(1−p) replaces σ²(T−t), the CARA reservation price, and a 4,000-path simulation comparing four quoting rules. Glosten–Milgrom for event contracts: the spread an informed trader forceshttps://libertasveritasprosperitas.com/research/glosten-milgrom-event-contracts2026-10-28T00:00:00Z2026-10-28T00:00:00ZThe Glosten–Milgrom adverse-selection model solved exactly for a binary event contract: closed-form bid, ask and spread, why the spread equals the informed share at 50¢, and simulated price discovery. Prediction market fees: break-even edge, rounding and maker vs takerhttps://libertasveritasprosperitas.com/research/prediction-market-fees2026-10-27T00:00:00Z2026-10-27T00:00:00ZThe arithmetic of prediction market fees: Kalshi's 0.07·C·P·(1−P) taker formula, per-contract cost by price and size, rounding drag on small orders, fee as a share of profit, and the minimum gap for arbitrage. The Kelly criterion for prediction markets, with estimation errorhttps://libertasveritasprosperitas.com/research/kelly-criterion-prediction-markets2026-10-26T00:00:00Z2026-10-26T00:00:00ZKelly sizing for binary event contracts: f* = (p − c)/(1 − c), the effect of fees, and a 4,000-path simulation showing how estimation error turns full Kelly from optimal to ruinous. The favourite–longshot bias in event contractshttps://libertasveritasprosperitas.com/research/favorite-longshot-bias2026-10-25T00:00:00Z2026-10-25T00:00:00ZWhy longshots are overpriced and favourites underpriced in betting and prediction markets: the evidence, competing explanations, a probability-weighting model with expected returns by price, and what fees and carry add. Automated market makers for prediction markets: LMSR, constant-product and order bookshttps://libertasveritasprosperitas.com/research/automated-market-makers-prediction-markets2026-10-24T00:00:00Z2026-10-24T00:00:00ZHow prediction market automated market makers work: LMSR and fixed-product (constant-product) pools for binary outcomes compared with order books, with exact price-impact costs and worst-case subsidy. LMSR: the logarithmic market scoring rule, derived and simulatedhttps://libertasveritasprosperitas.com/research/lmsr-logarithmic-market-scoring-rule2026-10-23T00:00:00Z2026-10-23T00:00:00ZThe logarithmic market scoring rule (LMSR) derived from the log scoring rule: cost function, prices, trade costs, the b·ln n loss bound, and a simulation of how the liquidity parameter b trades subsidy against accuracy. Proper scoring rules: why honesty is the optimal forecasthttps://libertasveritasprosperitas.com/research/proper-scoring-rules2026-10-22T00:00:00Z2026-10-22T00:00:00ZWhat makes a scoring rule proper, with proofs for the Brier and logarithmic rules, the Savage representation, a numerical demonstration that the linear rule rewards exaggeration, and how to choose a rule. How many forecasts does it take to tell two forecasters apart?https://libertasveritasprosperitas.com/research/how-many-forecasts-to-evaluate-a-forecaster2026-10-21T00:00:00Z2026-10-21T00:00:00ZA power analysis for comparing probability forecasters with the Brier score: how many resolved questions you need to detect overconfidence or noise, and how correlated questions inflate false positives. No-arbitrage bounds for event contracts: Dutch books, ladders and feeshttps://libertasveritasprosperitas.com/research/no-arbitrage-bounds-event-contracts2026-10-20T00:00:00Z2026-10-20T00:00:00ZThe coherence conditions event-contract prices must satisfy (Yes + No, complete sets, strike ladders, Fréchet bounds on joint outcomes) and how fees turn each equality into a no-trade band, with exact numbers. Market making in prediction markets: a practitioner's guidehttps://libertasveritasprosperitas.com/research/prediction-market-making2026-10-14T00:00:00Z2026-10-30T00:00:00ZA practitioner's guide to prediction market making: how event-contract market makers set spreads, manage inventory and jump risk, handle fees, and where the edge comes from. How to price event contracts: probabilities, fees and timehttps://libertasveritasprosperitas.com/research/pricing-event-contracts2026-09-30T00:00:00Z2026-10-30T00:00:00ZHow event contracts and prediction markets are priced: implied probability, the binary-option analogy, fees, time value of collateral, favourite-longshot bias and resolution risk. Kalshi vs Polymarket: market structure for professional tradershttps://libertasveritasprosperitas.com/research/kalshi-vs-polymarket2026-09-12T00:00:00Z2026-10-30T00:00:00ZKalshi vs Polymarket compared for professional traders: regulation, matching and settlement, collateral, fees, resolution process, APIs and what each means for liquidity and pricing. Forecast calibration: Brier score, log loss and why markets keep winninghttps://libertasveritasprosperitas.com/research/forecast-calibration-brier-score2026-08-27T00:00:00Z2026-10-30T00:00:00ZHow to measure probabilistic forecasts: Brier score, log loss, calibration and resolution, reliability diagrams, and why liquid prediction markets are hard for individual forecasters to beat. Cross-venue prediction market arbitrage: what is real and what is nothttps://libertasveritasprosperitas.com/research/prediction-market-arbitrage2026-08-05T00:00:00Z2026-10-30T00:00:00ZCross-venue prediction market arbitrage explained: why the same event trades at different prices, resolution basis risk, fees, carry and capital constraints, and how to evaluate an apparent arb.