Paper: arXiv 2605.02286

Authors: Maksym Nechepurenko

Abstract

This paper reports an end-to-end empirical evaluation of the deadline-Information Leakage Score (ILS-dl) extension introduced in the companion methodology paper. The deadline-ILS extends the original ILS to deadline-resolved prediction-market contracts, the dominant structural form of publicly documented insider trading on Polymarket. We anchor the evaluation in the 2026 U.S.-Iran conflict cluster of the ForesightFlow Insider Cases (FFIC) inventory, the largest documented deadline cluster. The evaluation has four parts: per-category exponential-hazard estimation, a single-case ILS-dl computation, cross-market wallet analysis, and methodological refinements. Hazard-rate estimation produces an adequate exponential fit for military-geopolitics markets (KS p = 0.426, half-life 2.9 days, n = 18) and a preliminary fit for corporate-disclosure markets (n = 5). The regulatory-decision category is rejected as bimodal (p = 0.023). On the largest applicable FFIC contract (“US forces enter Iran by April 30,” $269M volume), the article-derived public-event timestamp yields ILS-dl = +0.113 versus a resolution-anchored proxy value of -0.331: a 0.444 shift in magnitude on opposite sides of zero, demonstrating that the extension distinguishes signal from proxy artefact. Pre-event drift is mild, and short-window variants (30-min, 2-hour) are exactly zero. Cross-market wallet analysis identifies 332 wallets active in both major Iran-cluster markets, but the available trade history covers only the resolution-settlement window. v2 (May 2026) corrects the hazard fit to the full Tier-3 population; the v1 estimate lies inside the v2 95% CI.

Complexity vs Empirical Score

  • Math Complexity: 5.5/10
  • Empirical Rigor: 7.5/10
  • Quadrant: Holy Grail — high math complexity, high empirical rigor

Why this score: The paper combines formal information-theoretic modeling (Murphy decomposition, survival analysis, hazard-rate estimation) with extensive empirical application including blockchain wallet forensics, CLOB data, and LLM-assisted event verification. It bridges abstract financial theory with high-resolution market microstructure analysis and dataset production.

Research Flowchart

  flowchart TD
    A[<b>Research Goal:</b> Evaluate Deadline-ILS on Polymarket Insider Cases] --> B(<b>Data Inputs:</b> 2026 U.S.-Iran FFIC Inventory)
    B --> C[<b>Methodology:</b> Category-based Hazard Estimation & ILS-dl Computation]
    C --> D{<b>Process:</b> Statistical Fitting & Cross-Market Wallet Analysis}
    D --> E[<b>Outcomes:</b> Military-Geopolitical Hazard Fit & ILS-dl Signal Resolution]
    E --> F[<b>Conclusion:</b> 0.444 Magnitude Shift Demonstrates Distinction of Signal from Proxy]

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1 of 39 cited works are in the corpus; resolved via arXiv source bundles, Semantic Scholar and OpenAlex. Corpus-wide: 2518 linked papers.