Let me share a bit of math I recently figured out regarding decision markets. And let me illustrate it with Fire-The-CEO markets. Consider two ways that we can split $1 cash into two pieces. One way is: $1 = “$1 if A” + “$1 if not A”, where A is 1 or 0 depending on if a firm CEO stays in power til the end of the current quarter. Once we know the value of A, exactly one of these two assets can be exchanged for $1; the other is worthless. The chance a of the CEO staying is revealed by trades exchanging one unit of “$1 if A” for a units of $1.
Decision Market Math
The market creates these bundles, or the traders? What exactly is achieved?
Please explain I don't get it