How Depth Changes Displayed Probability in Prediction Markets
In a prediction market starting at a quoted probability of 88.0%, the displayed odds represent the marginal clearing price between YES and NO contracts. Unlike traditional financial markets where quotes are fixed until canceled, prediction market order books exhibit varying depth density.
Order Book Wedges
A large buy order consumes available ask offers, driving up the instantaneous marginal cost per share and advancing the implied outcome probability higher above the starting 88% anchor.
Depth Calibration
Thin order books suffer severe market impact from modest trades (e.g. $5,000 pushing odds from 88% to 93%), whereas high-depth institutional pools absorb large orders with minimal slippage.
Average Fill vs Final Price
The post-trade displayed probability reflects the final marginal share price required to fill the order, which is always higher than the average cost paid across all filled shares.