arxiv: 2605.02286 · v2 · submitted 2026-05-04 · 💱 q-fin.TR · q-fin.GN

Recognition: 1 theorem link

· Lean Theorem

Empirical Evaluation of Deadline-Resolved Information Leakage on Documented Polymarket Insider Cases

Maksym Nechepurenko

Authors on Pith no claims yet

Pith reviewed 2026-05-15 07:34 UTC · model grok-4.3

classification 💱 q-fin.TR q-fin.GN

keywords information leakageprediction marketsinsider tradingPolymarketdeadline-resolved contractshazard ratesempirical evaluation

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The pith

Deadline-ILS extension flips leakage score from negative proxy to positive signal on major Polymarket Iran contract.

A machine-rendered reading of the paper's core claim, the machinery that carries it, and where it could break.

The paper evaluates the deadline-Information Leakage Score extension on documented insider trading cases from the U.S.-Iran conflict cluster on Polymarket. It computes ILS-dl using article-derived public-event timestamps rather than resolution dates, and reports a shift from -0.331 to +0.113 on the largest contract. Exponential hazard models fit military-geopolitics markets adequately while regulatory categories show bimodality. The evaluation uses per-category estimation, single-case computation, cross-wallet analysis, and refinements to separate genuine pre-event leakage from resolution artefacts.

Core claim

On the largest applicable FFIC contract with $269M volume, the article-derived public-event timestamp produces ILS-dl of +0.113 versus a resolution-anchored proxy value of -0.331, a 0.444 shift in magnitude across zero. Hazard-rate estimation yields an adequate exponential fit for military-geopolitics markets with KS p-value 0.426 and half-life 2.9 days. The extension distinguishes signal from proxy artefact on deadline-resolved contracts that dominate documented Polymarket insider cases.

What carries the argument

The deadline-Information Leakage Score (ILS-dl) extension, which anchors leakage measurement to article-derived public-event timestamps instead of resolution dates for deadline-resolved prediction-market contracts.

If this is right

Exponential hazard models describe resolution timing in military-geopolitics markets with half-life of 2.9 days.
Short-window ILS-dl variants at 30 minutes and 2 hours equal exactly zero.
332 wallets appear active across major Iran-cluster markets though trade history is limited to the resolution-settlement window.
The v2 hazard fit to the full Tier-3 population contains the earlier v1 estimate inside its 95 percent confidence interval.

Where Pith is reading between the lines

These are editorial extensions of the paper, not claims the author makes directly.

Public timestamp sources could enable earlier detection of information flow in deadline markets before final resolution occurs.
Cross-market wallet overlap suggests coordinated activity that future analyses might link to specific trading patterns if fuller history becomes available.
The sign flip implies prior proxy-based measurements may have systematically understated leakage magnitude on contracts with delayed resolutions.

Load-bearing premise

The article-derived public-event timestamp accurately captures the information available to insiders without incorporating hindsight from the eventual resolution outcome.

What would settle it

Observing that ILS-dl values computed from article timestamps remain aligned with resolution-anchored proxies across additional contracts or that independent timestamp sources produce no consistent sign shift.

read the original abstract

This paper reports an end-to-end empirical evaluation of the deadline-Information Leakage Score (ILS-dl) extension introduced in the companion methodology paper. The deadline-ILS extends the original ILS to deadline-resolved prediction-market contracts, the dominant structural form of publicly documented insider trading on Polymarket. We anchor the evaluation in the 2026 U.S.-Iran conflict cluster of the ForesightFlow Insider Cases (FFIC) inventory, the largest documented deadline cluster. The evaluation has four parts: per-category exponential-hazard estimation, a single-case ILS-dl computation, cross-market wallet analysis, and methodological refinements. Hazard-rate estimation produces an adequate exponential fit for military-geopolitics markets (KS p = 0.426, half-life 2.9 days, n = 18) and a preliminary fit for corporate-disclosure markets (n = 5). The regulatory-decision category is rejected as bimodal (p = 0.023). On the largest applicable FFIC contract ("US forces enter Iran by April 30," $269M volume), the article-derived public-event timestamp yields ILS-dl = +0.113 versus a resolution-anchored proxy value of -0.331: a 0.444 shift in magnitude on opposite sides of zero, demonstrating that the extension distinguishes signal from proxy artefact. Pre-event drift is mild, and short-window variants (30-min, 2-hour) are exactly zero. Cross-market wallet analysis identifies 332 wallets active in both major Iran-cluster markets, but the available trade history covers only the resolution-settlement window. v2 (May 2026) corrects the hazard fit to the full Tier-3 population; the v1 estimate lies inside the v2 95% CI.

Editorial analysis

A structured set of objections, weighed in public.

Desk editor's note, referee report, simulated authors' rebuttal, and a circularity audit. Tearing a paper down is the easy half of reading it; the pith above is the substance, this is the friction.

Desk Editor's Note private letter to a colleague

The paper gives a concrete sign-flip result on one high-volume Iran contract that suggests the deadline ILS can separate signal from proxy, but the distinction depends on an unverified timestamp choice.

read the letter

The standout piece here is the single-contract comparison on the $269M US forces enter Iran market. The article-derived timestamp produces ILS-dl of +0.113 while the resolution-anchored proxy gives -0.331, a 0.444 shift across zero. That number is new and directly tests the extension on real documented volume from the FFIC inventory. The hazard fit for military-geopolitics markets also lands cleanly, with KS p=0.426, half-life 2.9 days, and n=18, plus the note that short windows show zero drift. The cross-wallet count of 332 overlapping traders adds minor context on participation patterns. These are the actual empirical outputs the work contributes. The central weakness is the public-event timestamp. If the selected articles were written or chosen with knowledge of the eventual resolution, the +0.113 value incorporates hindsight and the claimed separation from the proxy no longer holds. The abstract supplies no explicit selection rules, source verification steps, or confirmation that the timestamps pre-date resolution knowledge, so the stress-test concern stands on the evidence given. Hazard parameters fitted to the same evaluation categories add a layer of circularity when interpreting the result as clean signal versus artifact. The regulatory category rejection is noted but does not affect the main claim. This is narrow work aimed at people already working on prediction-market integrity and insider detection methods. It has enough new numbers and a testable extension to deserve referee time, even though the timestamp justification and data-selection details will need tightening. I would send it to peer review with a request that the authors document the exact article selection process and show the timestamps are independent of outcome knowledge.

Referee Report

3 major / 1 minor

Summary. The manuscript presents an empirical evaluation of the deadline-resolved Information Leakage Score (ILS-dl) extension on the ForesightFlow Insider Cases (FFIC) inventory, anchored in the 2026 U.S.-Iran conflict cluster. It reports per-category exponential hazard estimation (KS p=0.426 for military-geopolitics markets, n=18), a single-contract ILS-dl computation on the largest applicable case ('US forces enter Iran by April 30', $269M volume) yielding +0.113 for the article-derived timestamp versus -0.331 for the resolution-anchored proxy (0.444 shift), cross-market wallet analysis identifying 332 overlapping wallets, and minor methodological refinements including a v2 hazard fit update.

Significance. If the timestamp derivation is shown to be strictly pre-resolution and free of outcome knowledge, the work supplies a concrete, falsifiable empirical test of the ILS-dl extension with specific quantitative outputs (KS p-value, half-life, ILS-dl values) that directly address whether the deadline extension separates genuine leakage from proxy artifacts in deadline-resolved markets. The explicit reporting of fit statistics and the quantified sign-reversal shift on a high-volume contract strengthens the case for the method's utility, though the single-contract focus constrains broader claims.

major comments (3)

[Abstract] Abstract, single-case ILS-dl computation: the central claim that the 0.444 shift demonstrates distinction between signal and proxy artefact rests on the article-derived public-event timestamp for the 'US forces enter Iran by April 30' contract being strictly pre-resolution and uncontaminated by outcome knowledge; no selection criteria, exact extraction rule, or verification that chosen sources pre-date resolution are provided, leaving open the possibility that the +0.113 value incorporates hindsight and collapses the distinction.
[Abstract] Abstract, hazard-rate estimation: the exponential fit for military-geopolitics markets (KS p=0.426, half-life 2.9 days, n=18) is used to anchor the evaluation, yet the abstract states no full data-selection rules, robustness checks, or error-bar details; this is load-bearing because the ILS-dl values and the reported distinction depend on these fitted parameters.
[Abstract] Abstract, cross-market wallet analysis: the identification of 332 wallets active in both major Iran-cluster markets is reported, but the note that trade history covers only the resolution-settlement window undermines any claim that this analysis independently supports the leakage distinction.

minor comments (1)

[Abstract] Abstract: the v2 (May 2026) correction to the hazard fit is mentioned but without explicit comparison of the v1 and v2 parameter values or the exact Tier-3 population definition, reducing clarity on the update's impact.

Simulated Author's Rebuttal

3 responses · 0 unresolved

We appreciate the referee's detailed feedback on our manuscript. We have carefully considered each major comment and provide point-by-point responses below. Where appropriate, we will make revisions to address the concerns raised.

read point-by-point responses

Referee: [Abstract] Abstract, single-case ILS-dl computation: the central claim that the 0.444 shift demonstrates distinction between signal and proxy artefact rests on the article-derived public-event timestamp for the 'US forces enter Iran by April 30' contract being strictly pre-resolution and uncontaminated by outcome knowledge; no selection criteria, exact extraction rule, or verification that chosen sources pre-date resolution are provided, leaving open the possibility that the +0.113 value incorporates hindsight and collapses the distinction.

Authors: We agree that additional details on the timestamp derivation are necessary to support the central claim. In the revised manuscript, we will add a dedicated subsection or appendix detailing the selection criteria for article sources (earliest public reporting on the event), the exact extraction rule (publication timestamp of the source article), and verification steps confirming all sources pre-date the contract resolution. This information is drawn from the documented FFIC inventory, which logs source URLs and dates. We will also include a statement that no outcome knowledge was used in timestamp selection. revision: yes
Referee: [Abstract] Abstract, hazard-rate estimation: the exponential fit for military-geopolitics markets (KS p=0.426, half-life 2.9 days, n=18) is used to anchor the evaluation, yet the abstract states no full data-selection rules, robustness checks, or error-bar details; this is load-bearing because the ILS-dl values and the reported distinction depend on these fitted parameters.

Authors: We acknowledge that the abstract omits key details on the hazard-rate estimation. The revised abstract will specify the full data-selection rules (military-geopolitics category from the Tier-3 FFIC population, n=18), reference the KS goodness-of-fit test (p=0.426), half-life (2.9 days), and note that error bars and robustness checks (including v2 update with 95% CI) are provided in the main text and supplementary materials. This ensures the anchoring parameters are transparent. revision: yes
Referee: [Abstract] Abstract, cross-market wallet analysis: the identification of 332 wallets active in both major Iran-cluster markets is reported, but the note that trade history covers only the resolution-settlement window undermines any claim that this analysis independently supports the leakage distinction.

Authors: We concur that the cross-market wallet analysis, given the trade history limitation to the resolution-settlement window, cannot independently support the leakage distinction. In the revision, we will rephrase the abstract and relevant sections to present this analysis as exploratory evidence of potential overlapping trader activity rather than confirmatory support for the ILS-dl distinction. We will emphasize the data limitation and avoid overclaiming its role. revision: yes

Circularity Check

0 steps flagged

No significant circularity in empirical evaluation of ILS-dl extension

full rationale

The paper performs an empirical evaluation by fitting per-category exponential hazards (e.g., military-geopolitics: KS p=0.426, half-life 2.9 days, n=18) and computing ILS-dl on one contract using an extension defined in a companion methodology paper. The central demonstration—a 0.444 shift between article-derived timestamp ILS-dl (+0.113) and resolution-anchored proxy (-0.331)—relies on independently sourced timestamps and the pre-defined extension formula rather than reducing to the fitted parameters or self-citation by construction. The companion citation supplies the ILS-dl definition (normal for a follow-on evaluation paper) without the result being forced; the hazard fit is a separate statistical characterization step. No load-bearing step equates the claimed distinction to its inputs.

Axiom & Free-Parameter Ledger

1 free parameters · 1 axioms · 0 invented entities

The central claim depends on the ILS-dl definition from the companion paper and on exponential hazard models fitted to the same case data.

free parameters (1)

exponential hazard rate for military-geopolitics markets = half-life 2.9 days
Fitted to n=18 markets yielding half-life 2.9 days

axioms (1)

domain assumption Information arrival in deadline-resolved markets follows an exponential hazard process
Invoked for per-category hazard-rate estimation

pith-pipeline@v0.9.0 · 5628 in / 1231 out tokens · 42858 ms · 2026-05-15T07:34:11.507033+00:00 · methodology

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discussion (0)

Lean theorems connected to this paper

Citations machine-checked in the Pith Canon. Every link opens the source theorem in the public Lean library.

IndisputableMonolith/Cost/FunctionalEquation.lean washburn_uniqueness_aczel unclear

?

unclear
Relation between the paper passage and the cited Recognition theorem.

ILSdl(M) = ∆dl_pre / ∆dl_total where ∆dl_pre = p(T−event) − p(Topen)

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supports: The theorem supports part of the paper's argument, but the paper may add assumptions or extra steps.
extends: The paper goes beyond the formal theorem; the theorem is a base layer rather than the whole result.
uses: The paper appears to rely on the theorem as machinery.
contradicts: The paper's claim conflicts with a theorem or certificate in the canon.
unclear: Pith found a possible connection, but the passage is too broad, indirect, or ambiguous to say the theorem truly supports the claim.

Forward citations

Cited by 3 Pith papers

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Reference graph

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