In 2012, the now closed prediction market Intrade successfully predicted that Obama would be re-elected, even though polls were showing him behind for a while. Prediction markets are often more accurate than polls because people placing money on an outcome are usually fairly confident with it, otherwise they wouldn’t be betting money on it! In addition to this powerful incentive to predict right, prediction markets preserve anonimity, and the results then reflect more realistic assessments of people’s opinions, as they do not worry about reputation, authority or acceptability.
For their accuracy, prediction markets can be quite useful, and be used for many purposes, such as predicting the future path of a pandemic, predicting political conflict, predicting man-made disasters, etc. The economist David Rothschild, thinks prediction markets can be used “To make a more efficient world by allowing people to understand what’s going to happen so they can allocate resources more efficiently. And second, by understanding forecasts better and seeing how forecasts move in response to certain factors.”
Companies such as Google, HP and Intel have also taken advantages of prediction markets to decide on optimum product launch dates, product fares, and other business decisions.
One week ago, we wrote a post on Oscars Favourites according to Predictious odds. It turns out that all the Predictious favourites won the expected Oscars:
- 12 Years A Slave for Best Picture
- Matthew McConaughey for Best Actor
- Cate Blanchett for Best Actress
- Jared Leto for Best Supporting Actor
- Alfonso Cuarón for Best Director
- Frozen for Best Animated Feature
Of course, predicting Oscars are not going to change the world, however we believe this is a beginning, and we hope Predictious can later become a real tool to predict the future and make the world a better place.
If this topic interests you, here are some interesting reads about Prediction Markets:
- Prediction markets: value among the crowd (Financial Times)
- Why prediction markets still have a future? (Financial Times)
- What are “prediction markets” and how might they be useful in development work? (Unicef)
- Can Markets Predict the Future? (National Bureau of Economic Research)
- Why Can’t We Just Use Prediction Markets? (The Noisy Channel)