The Yes-side tax

Ask the record which side the desk signals more often and the answer is lopsided: NO, by a wide margin. That is not a house view about a boring world. It is the mirror image of a documented behavioral pattern: market participants systematically overtrade the Yes side of event contracts.

The academic literature on decentralized venues finds prices track outcomes well in aggregate, but with a persistent tilt: low-probability contracts trade rich. A five-cent Yes on a dramatic headline (an invasion, a resignation, a hundred-degree day in May) attracts lottery-ticket flow that a ninety-five-cent No never will, even though they are the same bet. The result is a small, durable tax paid by narrative buyers to base-rate sellers.

The desk's pricing pipeline is built to be immune to the story. A contract's fair price comes from reference classes, resolution criteria parsing, and scored expert judgment. The drama of the question never enters the model. When the market's price and the desk's price diverge by more than the Signal threshold, the direction of the divergence is, more often than not, the market paying too much for excitement.

This edge is real but bounded. It decays as venues mature, it compresses when liquidity deepens, and it disappears entirely on contracts where institutional flow dominates. Which is why the Signal standard demands a catalyst and an exit: harvesting a behavioral tax only works if you know when the collection window closes.