<p>For the market it does not matter, the prices/chances change exactly the same:
<em>e<sup>a-10</sup>/(e<sup>a-10</sup>+e<sup>b</sup>)</em> = <em>e<sup>a</sup>/(e<sup>a</sup>+e<sup>b+10</sup>)</em>.</p>

<p>For you as the trader, selling 10 yes shares is preferable. It means you get your money out and can invest it elsewhere.</p>

CC BY-SA 3.0
2015-11-19T18:45:50.413Z
2015-11-19T18:45:50.413Z
qznc
<p>Consider a <a href="https://en.wikipedia.org/wiki/Prediction_market" rel="noreferrer">prediction market</a> with two outcomes (Yes and No) and a scoring rule based on <a href="http://hanson.gmu.edu/mktscore.pdf" rel="noreferrer">Hansons’s LMSR</a>, i.e. <em>ln(e<sup>a</sup>+e<sup>b</sup>)</em>, where <em>a</em> and <em>b</em> are the number of Yes resp. No shares sold.</p>

<p>Assume that I have previously bought 10 Yes shares, but now I changed my mind and want to bet on the other side. I have the option to either sell my 10 yes shares, or buy 10 no shares.</p>

<p>When should I choose one or the other option? Is it always the same, or does it depend on, say, the current market?</p>

<markets><theory>
Prediction market based on LMSR: Sell, or buy other side?
Joachim Breitner
# Prediction market based on LMSR: Sell, or buy other side?

(Asked by: username_0 on 2015-11-19)

Consider a [prediction market](https://en.wikipedia.org/wiki/Prediction_market) with two outcomes (Yes and No) and a scoring rule based on [Hansons’s LMSR](http://hanson.gmu.edu/mktscore.pdf), i.e. *ln(ea+eb)*, where *a* and *b* are the number of Yes resp. No shares sold.

Assume that I have previously bought 10 Yes shares, but now I changed my mind and want to bet on the other side. I have the option to either sell my 10 yes shares, or buy 10 no shares.

When should I choose one or the other option? Is it always the same, or does it depend on, say, the current market?

**Tags:** markets, theory

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## 1 answers

### Answer by username_1 on 2015-11-19. Score: 3

For the market it does not matter, the prices/chances change exactly the same:
*ea-10/(ea-10+eb)* = *ea/(ea+eb+10)*.

For you as the trader, selling 10 yes shares is preferable. It means you get your money out and can invest it elsewhere.


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