Does the informativeness of markets come from wisdom of the crowd or the wisdom of a few? If a few, who are they? In their April 2026 paper entitled "Beyond the Wisdom of the Crowd: Concentrated Informed Trading in Earnings Prediction Markets" Wan Chu Cheong and Ane Tamayo examine who makes Polymarket earnings prediction markets (whether firms will beat earnings forecasts) informative. Specifically, for each market, they:
- Rank each wallet (trader) by the value of their net positions.
- Compare the predictive accuracy of top-ranked traders (whales) to that of other traders.
To ensure market liquidity, they focus on 435 earnings prediction markets created since September 2025, which involve median 184 traders and $16,665 volume. They employ all 435 markets to assess prediction accuracy and 381 markets matched to stock prices for tests involving equity returns. Using wallet addresses, timestamps, trade directions (buy or sell) and dollar values, predicted outcomes (Yes or No) and prices for 309,574 Polymarket trades by 21,083 traders, actual firm earnings beats/misses and matched stock returns as available during September 2025 through February 2026, they find that:
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