Topic: Seeing the future: Prediction markets and the wisdom of crowds
Speaker: Matt Burgess, Chief Executive, iPredict
Date: Monday 23 March 2009
Venue: Level 17, Chapman Tripp, 10 Customhouse Quay, Wellington (please note that there is no access to the building after 6pm)
Time: Refreshments from 5:30pm, seminar at 6pm
RSVP: to: firstname.lastname@example.org (please note that an RSVP is not compulsory, but we would appreciate hearing from you if you plan to attend)
Prediction markets have been counted among the most intriguing institutional innovations of the last quarter-century. A prediction market is a share market for future events in any field, including politics, business, and social outcomes. Traders in a prediction market take a position on the likelihood or expected outcome of a future event. The market price that emerges from trading is the prediction, and reflects the wisdom of the crowd.
In the twenty years since their invention in the United States, prediction markets have developed an extraordinary forecasting record and have outperformed every competing forecasting institution, most notably election polling. Prediction markets have several characteristics that give them strong advantages over rival forecasting methods. They are robust to manipulation, they require only a few traders to produce excellent forecasts, they can be run using real or play money, and market-based forecasts are a low cost alternative to polling, experts and group deliberation.
Matt Burgess describes what prediction markets are and their history, shows that they are one example of a recent harnessing of the wisdom of crowds, compares their performance to a range of alternative forecasting methods, and looks at the performance of New Zealand’s real money prediction market iPredict since its launch in September 2008.
- Matt Burgess is the Chief Executive of iPredict, the real money prediction market owned by Victoria University and the Institute for the Study of Competition and Regulation (ISCR). He is a Research Associate at the ISCR.