DOI: 10.1257/0895330041371321. Prediction Markets

Prediction Markets

10.1257/0895330041371321

Crossref journal-article

American Economic Association

Journal of Economic Perspectives (11)

Abstract

We analyze the extent to which simple markets can be used to aggregate disperse information into efficient forecasts of uncertain future events. Drawing together data from a range of prediction contexts, we show that market-generated forecasts are typically fairly accurate, and that they outperform most moderately sophisticated benchmarks. Carefully designed contracts can yield insight into the market's expectations about probabilities, means and medians, and also uncertainty about these parameters. Moreover, conditional markets can effectively reveal the market's beliefs about regression coefficients, although we still have the usual problem of disentangling correlation from causation. We discuss a number of market design issues and highlight domains in which prediction markets are most likely to be useful.

Bibliography

Wolfers, J., & Zitzewitz, E. (2004). Prediction Markets. Journal of Economic Perspectives, 18(2), 107â126.

Authors 2

Justin Wolfers (first)
Eric Zitzewitz (additional)

References 18 Referenced 684

10.1016/S0304-4076(00)00091-9
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Dates

Type	When
Created	21 years, 1 month ago (July 9, 2004, 8:29 p.m.)
Deposited	5 years, 2 months ago (June 2, 2020, 5:45 p.m.)
Indexed	3 days, 7 hours ago (Aug. 26, 2025, 3:13 a.m.)
Issued	21 years, 3 months ago (May 1, 2004)
Published	21 years, 3 months ago (May 1, 2004)
Published Print	21 years, 3 months ago (May 1, 2004)

Funders 0

None

BibTeX

@article{Wolfers_2004, title={Prediction Markets}, volume={18}, ISSN={0895-3309}, url={http://dx.doi.org/10.1257/0895330041371321}, DOI={10.1257/0895330041371321}, number={2}, journal={Journal of Economic Perspectives}, publisher={American Economic Association}, author={Wolfers, Justin and Zitzewitz, Eric}, year={2004}, month=may, pages={107–126} }

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