Prediction Markets

Definition

From Melanie Swan at http://www.melanieswan.com/social_finance.html

Prediction Markets allow "individuals to log their predictions of the outcomes of a variety of events ... Either fictitious or real money or points are used to keep score."

"Economists like Wharton Professor Justin Wolfers have shown that the Wisdom of Crowds of Prediction Markets often beats traditional forecasting methods. Prediction Markets are becoming an increasingly important venue for price, opinion and information discovery. There are several existing prediction markets and free platform software like Zocalo for users to develop their own." (http://www.melanieswan.com/social_finance.html)

Examples

From an article by Melanie Swan at http://www.melanieswan.com/social_finance.html

A few Prediction Markets examples:

Yahoo! Research and O’Reilly Tech Buzz Game, at http://buzz.research.yahoo.com/

Iowa Electronic Markets, at http://www.biz.uiowa.edu/iem/

Hedge Street (A real financial exchange using real money), at http://hedgestreet.com/

Long Bets (affiliated with the Long Now Foundation), at http://www.longbets.org/

The Foresight Exchange Prediction Market, at http://www.ideosphere.com/

More Information

Bernardo Huberman on Prediction Markets, webcast

Guide to Prediction Markets, audio podcast by Business Week