Comments on: The Efficacy Of Prediction Markets http://www.thelibertypapers.org/2007/11/08/the-efficacy-of-prediction-markets/ Life. Liberty. Property. Defending individual freedom and liberty, one post at a time. Fri, 17 May 2013 18:49:12 +0000 hourly 1 http://wordpress.org/?v=3.5.1 By: Jed Christiansen http://www.thelibertypapers.org/2007/11/08/the-efficacy-of-prediction-markets/#comment-43529 Jed Christiansen Fri, 09 Nov 2007 18:13:03 +0000 http://www.thelibertypapers.org/2007/11/08/the-efficacy-of-prediction-markets/#comment-43529 Hi, Brad. You’re absolutely right. I consult with companies to help them implement prediction markets in their business.

It’s a bit of a fallacy that prediction markets “know the future.” What prediction markets really do is aggregate all of the knowledge out there together in one spot. While we can never know the future, a forecast based on the best current knowledge and experience will be better than virtually any other system. A prediction market forecast may very well not be as accurate as you want it to be, but it is more accurate than anything else you can try.

Regarding elections, lots of people have lots of reasons to answer the way they do when polled. But when you ask “Who is _going_ to win” (instead of “who are you going to vote for”) and people put money behind it, you’re going to get what they really believe!

Regards,
Jed
http://blog.mercury-rac.com

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