The paper develops a market-quality measurement framework for institutional liquidity in prediction markets and uses synthetic simulations to show that liquidity improvements do not benefit all traders equally, with larger welfare losses for slower traders during information shocks.
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What Happens When Institutional Liquidity Enters Prediction Markets: Identification, Measurement, and a Synthetic Proof of Concept
The paper develops a market-quality measurement framework for institutional liquidity in prediction markets and uses synthetic simulations to show that liquidity improvements do not benefit all traders equally, with larger welfare losses for slower traders during information shocks.