prediction market is also called information market, is the market that collect information and predict the future event based on the information. and social media, as a growing platform which get into people’s life gradually, play a role in prediction market as well.
and some requirements need to be met if companies want to use social media to predict. first of all, the prediction should be human related. if it is not human related, like nature event, nobody can predict even if everyone discuss about it via social media. next is that you need certain amount of people involved, it is more like statistics, more bigger the sample, the more accurate that result will be. lastly, the content should be easy-talked. if it is related to private issue, nobody will discuss about it.
the first example i found the PreTweeting, it is like investing in shocks. however, in PreTweeting, people focus on words or topic rather than shocks. and the second example is about network value, that is, Telenor, a mobile phone, used network value of its customers to predict the future demand for iPhone. Acknowledged the importance of network value, many companies now is using network value of their customers on social media to predict and do the decision making.