All termsAdvanced Prediction Market AnalysisWorth knowing
Probability Tree
A probability tree is a structured way of mapping possible sequences of events and the probabilities associated with each path.
Why it matters to you
Some prediction questions depend on several events occurring in sequence. Instead of asking only: "Will the final event happen?" a trader can break the question into stages. For example: Inflation falls ↓ Central bank becomes more willing to ease ↓ Rate cut occurs A probability tree helps expose which assumptions are doing most of the work in the final estimate.
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