Price as Probability
Price as probability is the convention of interpreting a prediction market price as the market’s implied chance of the outcome, often approximately but not always exactly.
Definition
Price as probability is the convention of treating a prediction market price as an implied probability. For many yes/no markets, a YES price near 0.62 is interpreted as about a 62% chance.
Important caveats
• Microstructure, fees, and constraints can move price away from “true belief”.
• Thin liquidity can make price noisy.
• Some platforms use different contract conventions or payout structures.
Why it matters
This convention enables benchmarking forecasters against market consensus and building public indexes like a consensus benchmark.
Related
See implied probability, market consensus, and liquidity related terms.