# Core Concepts

### Fair Value

In Yala, fair value refers to the probability that a specific outcome will occur by a defined future time.

Fair value:

* Is expressed as a probability
* Serves as a reference point, not a guarantee
* Enables rational comparison against market prices

In practice:

* If fair value > market price of “Yes,” buying Yes or selling No is statistically favorable
* If fair value < market price of “Yes,” selling Yes or buying No is statistically favorable

Fair value does not eliminate uncertainty, but it improves long-term decision quality and expected outcomes in probability-based markets.

### Risk-Neutral and Subjective Fair Value

Yala’s roadmap distinguishes between two forms of fair value:

Risk-Neutral Fair Value

* Derived primarily from historical trading data
* Reflects no-arbitrage pricing logic
* Forms the foundation of Yala’s early and mid-stage agents
* Risk-neutral fair value leverages the defining property of prediction markets, where prices directly encode probabilities, making them uniquely suitable for probabilistic calibration.

Subjective Fair Value

* Incorporates additional signals such as sentiment, macro events, and domain-specific context
* Introduced in later stages of the roadmap
* Used to refine probability estimates beyond pure market-based inputs

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