Types of markets
There are currently 4 types of markets: Yes/No and Free response. We strongly recommend creating Yes/No markets when you can as they have the best mechanism.
Yes/No Markets
Our main type of market. The creator asks a question where traders can bet either yes or no.
When to use
Use whenever you have a question that has two well-defined possible outcomes. Often this is simply “will X event occur?” and it either will or will not.
Payout
Yes/No markets are binary and have fixed pay-outs. You buy a certain number of shares which will each earn you M$1 if the market resolves in your favour. This means that subsequent bets from other users affect the sell value of your shares, but not what your profit will be if proven correct.
Closing date
Thanks to having a fixed pay-out, Yes/No markets can be left open for as long as you like, all the way up to the resolution time.
Free Response Markets
The creator asks an open-ended question. Both the creator and users can propose answers which can be bet on. Don’t be intimidated to add new answers!
When to use
Use whenever you have a question that has multiple outcomes. Best chosen if you think you may want to add more after the market creation or if you want other users suggesting answers.
Pay-out
Free response and multiple choice markets use a different system from binary markets and have variable, parimutuel-style pay-outs. Subsequent bets from other users will affect your profit. This unfortunately means you might not make as much betting on an answer as you initially expect.
Closing date
Due to having a variable pay-out, it is important to make sure the market closes before definite resolution conditions are met. Otherwise, users will be able to react to news and reduce the profits of early bettors.
Why do the %’s on the graph not add up to 100%?
The blank space represents the initial liquidity (M$100 cost) injected into the market upon creation. This effectively works as an ante so new answers that are created have something to be staked against.
Multiple Choice
The creator asks a question with a list of possible outcomes. Users can bet to increase the probability of the outcome(s) they believe most likely.
When to use
Use whenever you have a question that has multiple outcomes. Best chosen if you think you know all the possible outcomes at the time of creation and don’t want any more to be added.
Pay-out
Multiple choice and free response markets use a different system from binary markets and have variable pay-outs. Subsequent bets from other users will affect your profit. This unfortunately means you might not make as much betting on an answer as you initially expect. You could also make more though if other answers are bet up but then you are correct!
Closing date
Due to having a variable pay-out, it is important to make sure the market closes before definite resolution conditions are met. Otherwise, users will be able to react to news and reduce the profits of early bettors.
Numerical
Numerical markets are well-suited for questions which can be answered by a number within a given range.
Behind the scenes, a numerical market works exactly the same as a Yes/No market with the top of the range corresponding to YES (100%) and the bottom corresponding to NO (0%).
Numeric markets are typically resolved to a number within the range, whereas Yes/No markets are resolved to one end or the other.
Be careful when choosing the range to not set it too big as otherwise small bets might make the number move a relatively large amount. If you are not sure what the max will be, instead of setting a really high max, set a reasonable one and add to the description that anything higher will just resolve to the max.
When to use
Use whenever you have a question that involves a numeric answer.
- Date: How many days until aliens invade?
- Quantity: How many users will sign up for Manifold in 2022?
- Value: What will BTC peak at this month?
Pay-out
Bets in a numerical market have a fixed pay-out. Subsequent bets from other users affect the sell value of your shares, but not what your profit will be if proven correct.
Closing date
Thanks to having a fixed pay-out, Numerical markets can be left open for as long as you like, all the way up to the resolution time.
Log-scale
Numeric markets have the option to use a log scale when choosing a range. This can be useful if the lower bound is several order of magnitude smaller than the upper bound. When choosing a range you should try and choose as small a range as possible so the liquidity isn’t too spread out.
