Prediction markets for future events are increasingly common and they often trade several contracts for the same event. This paper considers the distribution of a normative risk-neutral trader who, given any portfolio of contracts traded on the event, would choose not to reallocate that...

Each market is related to a specific future event, for instance a presidential election, and contains a set of contracts with liquidation values pegged to the outcome of the future event. Contracts enter into circulation by the voluntary purchase from the IEM trading system of bundles of...