Consider a conditional prediction market, e.g. "if my cool policy is implemented, then widget production will increase by at least 15%". To my understanding, markets like this are intended as a tool for finding and the market just gets unwound or undone or refunded if doesn't occur.
I can work through the math and see that refunding the market indeed makes the price reflect , but this exacerbates one of the biggest issues with prediction markets: no one wants to lock up of capital to extract of profit in a year, so no one will lock up of capital to extract of profit in a year and only if some extra event happens.
My question is: are there any interesting or viable alternative ways to run a counterfactual or conditional prediction market? Off the top of my head, I could imagine using markets for and to derive , which would still pay out something if didn't occur.