Wisdom of the Few? Prediction Markets Are Driven by a Small Number of Skilled Traders (opens in new tab)

The prevailing view is that prediction markets like Polymarket and Kalshi get their accuracy by aggregating the views of vast numbers of participants. But a new study co-authored by Yale SOM’s Theis Jensen finds that, in fact, a small group of informed traders drive prices — and take home a large portion of the profits.