Prediction Markets: Background Reading
From CommerceNet Wiki
Here are some good papers on Prediction Markets. They are arranged in order of relevance. The first two are general introductions to the idea, how these markets work and why they would be useful to implement; the first in a general context, and the second focusing on election markets. The third paper presents the results of the HP Sales forecasting market. Its contribution is in showing how prediction markets can help in a corporate context.
The last two are more speculative. First, how to use prediction markets to manage investment projects in the developing world to ensure maximum effectiveness of the funds, and finally, a paper that is interesting because it shows how to use prediction markets to tease apart two aspects of political disagreements: beliefs about what strategies would produce beneficial results, and values about what results would be beneficial. The first kind of disagreement is measurable, so Prediction Markets could help resolve the disagreement; the second kind is about values, so voting is the appropriate way to reach agreement.
- Overview of Prediction Markets: how they work, why they are useful Wolfers: Prediction Markets
- The use of markets in predicting election outcomes. How accurate are they and why? IEM: Results from a Dozen Years of Election Markets Research
- Description of the HP sales forecasting market Plot: Information Aggregation Mechanisms
[edit] More speculative
- How to apply Prediction Markets to improving economic development projects in the developing world. Hahn: Harnessing the Power of Information: A New Approach to Economic Development
- Robin Hanson suggests a mechanism to distinguish between values and expectations in political contexts. Hanson: Shall we vote on values, bet on beliefs a short intro, and a more formal presentation
