The Legal Aggregate
Adverse Selection in Prediction Markets: Evidence from Kalshi
(Originally published by SSRN on April 21, 2026.) Using 41.6 million trades, we measure adverse selection in prediction markets. Adapting Kyle's λ and the Glosten-Harris decomposition, we show single-name markets exhibit greater informed price impact than broad-based markets. Despite this, effective spreads are only modestly wider, and market makers earn…
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