Prediction markets (also known as predictive markets, information markets, decision markets, idea futures, event derivatives, or virtual markets) are speculative markets created for the purpose of making predictions. The current market prices can then be interpreted as predictions of the probability of the event or the expected value of the parameter. For example, a prediction market security might reward a dollar if a particular candidate is elected, such that an individual who thinks the candidate had a 70% chance of being elected should be willing to pay up to 70 cents for such a security.
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.
Other articles related to "prediction market, market, predictions, prediction markets, prediction, markets":
... The most common application is the prediction market, a speculative or betting market created to make verifiable predictions ... Surowiecki discusses the success of prediction markets ... Similar to Delphi methods but unlike opinion polls, prediction (information) markets ask questions like, “Who do you think will win the election?” and predict outcomes rather well ...
... These stocks do not expire like most contracts on prediction markets because the founder, Brian Shiau, argued that video game sales can continue for years ... information problem of evaluating a company's market value ... Gamble has described the simExchange as a Keynesian beauty contest and that financial markets have certain remedies such as company buy-outs that cannot happen on the simExchange ...
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