“Whales bleed expected value to small traders driven by conviction, not information”
Analyzes tick-level order flow across Polymarket and Kalshi to decompose market bias by trader type. Finds that the classic favorite-longshot bias may be a statistical artifact masking a pervasive "yes bias" driven by temporal volatility and incomplete controls for contract lifecycle. Also shows that whales are not the sharpest participants: heavily capitalized traders systematically bleed expected value to small-order traders, likely driven by ideological conviction rather than informational edge.
Extensive technical background assumed
Platforms mentioned: Polymarket, Kalshi