Graduation Year
2026
Date of Submission
12-2025
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics
Reader 1
Eric Hughson
Rights Information
©2025 Nicholas Smole
Abstract
This thesis examines the accuracy of Kalshi prediction markets and how different measures of trading volume shape their calibration and predictive power. Expanding upon previous models, use nonparametric calibration curves, pseudo-likelihood regressions, and Brier-score regressions on a large panel of Kalshi contracts to compare the effects of ex-post total volume and cumulative trading volume on market accuracy. Markets are typically well-calibrated near expiration; however, at longer horizons, low-volume markets exhibit substantially more miscalibration. Holding time to expiration fixed, greater cumulative volume is associated with higher accuracy. In comparison, higher ex-post total volume is associated with lower accuracy, highlighting the importance of using a volume measure at the time of trading.
Recommended Citation
Smole, Nicholas, "Trading Volume and Forecast Accuracy in Kalshi Prediction Markets" (2026). CMC Senior Theses. 4267.
https://scholarship.claremont.edu/cmc_theses/4267
Included in
Behavioral Economics Commons, Econometrics Commons, Economic Theory Commons, Finance Commons, Other Economics Commons
