evidence markets

A generalization of prediction markets that incentivizes the submission of evidence alongside beliefs, using an LMSR with dynamic liquidity parameters that adjust to accumulated evidence quality. Evidence markets can resolve endogenously using crowd-sourced evidence when external ground truth is unavailable, and use LLM-as-a-Judge verification with staking for operational deployment.

Cluster: Mechanism Design

Related Concepts

• market scoring rules — A class of automated market maker mechanisms that subsidize trade by penalizing a market maker according to a proper scoring rule. Traders profit by moving prices closer to their beliefs, ensuring the market maker absorbs losses in exchange for eliciting honest probability estimates. LMSR is the most widely used instance.
• incentive compatibility — Designing mechanisms where truthful participation is each player's optimal strategy regardless of others' actions.

Articles about evidence markets

• Evidence Markets by Safwan Hossain, Gabriel Andrade, Chengqi Zang, Yiling Chen