[Homework Assignment] Prediction Markets – they can do anything! .. right?


When browsing for specific examples of the usage of prediction markets, I came across a bazillion cases of them being used in political campaigns, or on the Hollywood Stock Exchange and it just wasn’t “doing it” for me. I knew that someone out there had to have used prediction markets for something interesting or unexpected. Well, after tireless search I found a controversial case and a cool medical case.

Firstly – by now we probably all know who Al Gore is. The guy with the “global warming” warnings. Whether you agree with him or not is your business, but researchers have decided to place a bet between Gore and Armstrong (one of the authors, who opposes Gore’s idea) that will span over 10 years, annually doing climate evaluations, and after a decade they will reveal the final results. Using HubDub, an independent prediction market, and using it openly for anyone to use, the early results from 2009 predict that so far, Armstrong will win.

I found this case interesting since it’s a work in progress, and as a conspiracy theory nut myself, I can’t wait to see the results. When I’m 28 years old. Still worth it!

Then my second case is far more serious in nature, and way cooler I believe. In this one, prediction markets are use to predict when flu outbreaks will take place. Using IEM, traders with healthcare professional background and past history of outbreaks for benchmarking, the researchers were able to outperform past findings with three to four weeks, and to me that’s amazing.

While the first paper has some methodological issues while the second one is much stronger but still has a few dents in its strategy, both are the type of prediction markets I want to see more of. It’s safe to say I got hooked on the idea of prediction markets because of this assignment. It seems so simple and it gives such interesting results.

Assignment:

[355870, Antoan Markov] Homework Assignment – Prediction Markets

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