Prediction Market Accuracy Driven by Elite Traders

A recent study analyzing prediction market trades reveals that a small fraction of highly skilled traders, approximately 3%, are responsible for the majority of price discovery. Contrary to the 'wisdom of the crowd' theory, these informed individuals consistently outperform chance and drive market accuracy, while the remaining 97% of participants primarily provide liquidity and volume, often ending up on the losing side. The research highlights the challenge in distinguishing genuine skill from luck, as many seemingly successful traders fail to maintain their performance over time. This concentration of influence raises questions about market manipulation and the true nature of collective intelligence in prediction platforms.