Resolution Criteria

Resolution criteria are the detailed rules specifying exactly how a prediction market question will be interpreted and resolved. They define which data sources will be used, how ambiguous outcomes will be handled, what happens if the event is delayed or cancelled, and any other edge cases that might affect settlement. Well-written resolution criteria are essential for fair markets — poor criteria lead to disputes, manipulation opportunities, and participant distrust.

For example, a contract on "US unemployment rate below 4% in Q1 2025" might specify: uses the BLS U-3 rate from the initial release (not revisions), rounds to one decimal place, and resolves NO if the BLS delays publication beyond 30 days. Without these specifications, the same question could have multiple legitimate answers.

Traders should always read resolution criteria carefully before entering positions. Some contract resolves have surprised participants because the resolution criteria technically required an outcome different from what common sense would suggest. This is particularly important for contracts with long time horizons, political questions with complex definitions, or markets where the underlying measurement methodology could change before resolution.