"(though you can make an argument that being hated by Kim Jong-un is a net benefit to a US politician). "

Yeah, sure, that works too, though then the 'threat of being nuked' seems like a red herring.

"In the case of my example, the market participants all genuinely believe that there is no causal effect of the election results. However, they are not ignoring it: The contracts are just written such that participants are not asked to bet on the causal effect of the election results, but on conditional probabilities."

That makes a lot more sense than the original post, IMO. I'm still trying to process it entirely though, and figure out how useful such an example is. Thanks for your responses.