negative risk markets

Markets whose payoffs are negatively correlated, so buying a contract can be converted into a position in the complementary contract. Polymarket's NegRisk Adapter operationalizes NO-to-YES conversion before settlement, reducing capital lock-up and enabling inventory recycling across linked markets.

Cluster: Mechanism Design

Related Concepts

• market efficiency — How well prices reflect all available information, and how quickly they adjust to new information. In prediction markets, efficiency depends not only on payoff structure (no-arbitrage bounds from terminal payoffs) but on whether the protocol exposes payoff equivalences as executable primitives.
• arbitrage — Exploiting price differences for equivalent outcomes across markets or platforms for risk-free profit.
• order book — A list of outstanding buy and sell orders at various prices, showing available liquidity at each level.

Articles about negative risk markets

• Executable Arbitrage and Market Efficiency in Prediction Markets by Jonas Gebele, Timm Mutzel, Florian Matthes