Overconfidence
Overconfidence occurs when a trader has greater confidence in their judgement or probability estimate than the available evidence justifies.
Why it matters to you
Prediction markets make overconfidence expensive. A trader who repeatedly estimates: 90% when the evidence only supports something closer to: 60% may consistently overpay for contracts or take positions that are too large. Good forecasting requires being willing to say: "I might be wrong."
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