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This is a blog on why we believe and do what we do, why we pretend otherwise, how we might do better, and what our descendants might do, if they don't all die.
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Here’s a more-polished-than-usual video by me summarizing the idea of prediction market:
Me on Prediction Markets
Hedging can be a motive for trade, and if the bet event is correlated with one of the few market "factors" that have risk premia, then the market probability for that event will weight high risk states differently. The prices can still be informative then however, and most claims don't correlate much with any of these factors.
I'm confused about your point re betting prices. If the outcome of A is correlated with other valuable things e.g. stock market prices, then betting on A can act as a hedge, distorting the price away from the underlying probability.