Difference between revisions of "Prediction market"

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Prediction markets speculative markets created for the purpose of making predictions. Assets are created whose final cash value is tied to a particular event (e.g., will the next US president be a Republican) or parameter (e.g., total sales next quarter). The current market prices can then be interpreted as predictions of the probability of the event or the expected value of the parameter. Prediction markets are thus structured as betting exchanges, without any risk for the bookmaker.
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Prediction markets are speculative markets created for the purpose of making predictions. Assets are created whose final cash value is tied to a particular event or parameter. The current market prices can then be interpreted as predictions of the probability of the event or the expected value of the parameter. Prediction markets are thus structured as betting exchanges, without any risk for the bookmaker. [[Robin Hanson]] was the first to run a corporate prediction market - at Project Xanadu -, and has made several contributions to the field such as: conditional predictions, accuracy issues and market and media manipulation.  
  
 
People who buy low and sell high are rewarded for improving the market prediction, while those who buy high and sell low are punished for degrading the market prediction. Evidence so far suggests that prediction markets are at least as accurate as other institutions predicting the same events with a similar pool of participants.
 
People who buy low and sell high are rewarded for improving the market prediction, while those who buy high and sell low are punished for degrading the market prediction. Evidence so far suggests that prediction markets are at least as accurate as other institutions predicting the same events with a similar pool of participants.
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Predictions markets have been used by organizations such as Google, General Electric, and Microsoft; several online and commercial prediction markets are also in operation. Historically, prediction markets have often been used to predict election outcomes.
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==See also==
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*[[Prediction]]
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*[[Economic consequences of AI and whole brain emulation]]
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*[[Group rationality]]
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*[[Making beliefs pay rent]]
  
 
==Blog posts==
 
==Blog posts==
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*[http://www.overcomingbias.com/2006/11/first_known_bus.html A 1990 Corporate Prediction Market]  by [[Robin Hanson]]
 
*[http://www.overcomingbias.com/2006/11/first_known_bus.html A 1990 Corporate Prediction Market]  by [[Robin Hanson]]
 
*[http://www.overcomingbias.com/2006/12/leamers_1986_id.html Leamer's 1986 Idea Futures Proposal] by Robin Hanson
 
*[http://www.overcomingbias.com/2006/12/leamers_1986_id.html Leamer's 1986 Idea Futures Proposal] by Robin Hanson
*[http://www.overcomingbias.com/2006/12/does_profit_rat.html Does Profit Rate Insight Best?] by Robin Hanson
 
 
*[http://www.overcomingbias.com/2006/12/should_predicti.html Should Prediction Markets be Charities?] by Peter McCluskey
 
*[http://www.overcomingbias.com/2006/12/should_predicti.html Should Prediction Markets be Charities?] by Peter McCluskey
 
*[http://www.overcomingbias.com/2006/12/the_future_of_o_1.html The Future of Oil Prices 2: Option Probabilities] by [[Wikipedia:Hal Finney (cipherpunk)|Hal Finney]]
 
*[http://www.overcomingbias.com/2006/12/the_future_of_o_1.html The Future of Oil Prices 2: Option Probabilities] by [[Wikipedia:Hal Finney (cipherpunk)|Hal Finney]]
 
*[http://www.overcomingbias.com/2009/09/prediction-markets-as-collective-inteligence.html Prediction Markets As Collective Intelligence] by Robin Hanson
 
*[http://www.overcomingbias.com/2009/09/prediction-markets-as-collective-inteligence.html Prediction Markets As Collective Intelligence] by Robin Hanson
 
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*[http://www.overcomingbias.com/2011/11/conditional-close-election-markets.html Fixing Election Markets] by Robin Hanson
==See also==
 
 
 
*[[Prediction]]
 
*[[Group rationality]]
 
*[[Making beliefs pay rent]]
 
  
 
==External links==
 
==External links==
  
 
*[http://hanson.gmu.edu/ideafutures.html Idea Futures (a.k.a. Prediction Markets)] by Robin Hanson
 
*[http://hanson.gmu.edu/ideafutures.html Idea Futures (a.k.a. Prediction Markets)] by Robin Hanson
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*[http://dl.dropbox.com/u/5317066/2011-graefe.pdf Comparing face-to-face meetings, nominal groups, Delphi and prediction markets on an estimation task]
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*[http://videolectures.net/uai08_hanson_cpm/ Video of Robin Hanson's Combinatorial Prediction Markets lecture at the Uncertainty in Artificial Intelligence conference in Helsinki, 2008]
 
*[http://www.gwern.net/Prediction%20markets Prediction Markets] at gwern.net
 
*[http://www.gwern.net/Prediction%20markets Prediction Markets] at gwern.net
  
 
[[Category:Concepts]]
 
[[Category:Concepts]]
 
[[Category:Techniques]]
 
[[Category:Techniques]]

Latest revision as of 02:04, 12 September 2012

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Prediction markets are speculative markets created for the purpose of making predictions. Assets are created whose final cash value is tied to a particular event or parameter. The current market prices can then be interpreted as predictions of the probability of the event or the expected value of the parameter. Prediction markets are thus structured as betting exchanges, without any risk for the bookmaker. Robin Hanson was the first to run a corporate prediction market - at Project Xanadu -, and has made several contributions to the field such as: conditional predictions, accuracy issues and market and media manipulation.

People who buy low and sell high are rewarded for improving the market prediction, while those who buy high and sell low are punished for degrading the market prediction. Evidence so far suggests that prediction markets are at least as accurate as other institutions predicting the same events with a similar pool of participants.

Predictions markets have been used by organizations such as Google, General Electric, and Microsoft; several online and commercial prediction markets are also in operation. Historically, prediction markets have often been used to predict election outcomes.

See also

Blog posts

External links