Michael Abramowicz
- Published in print:
- 2008
- Published Online:
- October 2013
- ISBN:
- 9780300115994
- eISBN:
- 9780300144956
- Item type:
- chapter
- Publisher:
- Yale University Press
- DOI:
- 10.12987/yale/9780300115994.003.0001
- Subject:
- Economics and Finance, Economic Systems
This chapter suggests that prediction markets can provide objective gauges of expert consensus for the media to pass along to the public. Experience suggests that prediction markets are generally ...
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This chapter suggests that prediction markets can provide objective gauges of expert consensus for the media to pass along to the public. Experience suggests that prediction markets are generally fairly accurate, and, at least, they provide incentives for those who could beat the market to push predictions in a sensible direction. The chapter describes a relatively simple structure for a prediction market that can be used to estimate the probability that a particular event will occur. After recounting the experiences of perhaps the most famous prediction market, the nonprofit Iowa Electronic Markets (IEM), the chapter elaborates a more general type of numeric prediction market that the IEM also uses. The chapter also argues that prediction markets offer considerable advantages and also present unique challenges. The chapter suggests how the media might use prediction markets to provide better information to readers and viewers.Less
This chapter suggests that prediction markets can provide objective gauges of expert consensus for the media to pass along to the public. Experience suggests that prediction markets are generally fairly accurate, and, at least, they provide incentives for those who could beat the market to push predictions in a sensible direction. The chapter describes a relatively simple structure for a prediction market that can be used to estimate the probability that a particular event will occur. After recounting the experiences of perhaps the most famous prediction market, the nonprofit Iowa Electronic Markets (IEM), the chapter elaborates a more general type of numeric prediction market that the IEM also uses. The chapter also argues that prediction markets offer considerable advantages and also present unique challenges. The chapter suggests how the media might use prediction markets to provide better information to readers and viewers.
