Prediction markets : fundamentals, designs, and applications
Accurate predictions are essential in many areas such as corporate decision making, weather forecasting and technology forecasting. Prediction markets help to aggregate information and gain a better understanding of the future by leveraging the wisdom of the crowds. Trading prices in prediction markets thus reflect the traders' aggregated expectations on the outcome of uncertain future events and can be used to predict the likelihood of these events. This book demonstrates that markets are accurate predictors. Results from several empirical studies reported in this work show the importance of
1 online resource (xiv, 140 pages)
9783834970855, 3834970859
760296230
Preface; Table of Contents; List of Figures; List of Abbreviations; List of Tables; 1. Introduction; 1.1. Motivation; 1.2. Overview and Structure; 2. Fundamentals of Prediction Markets; 2.1. History; 2.2. Definition; 2.3. Theoretical Foundations; 2.4. Operational Principle; 3. Key Design Elements of Prediction Markets; 3.1. Contracts; 3.2. Trading Mechanisms; 3.3. Incentives; 3.3.1. Description of the Field Experiment on Monetary Incentives; 3.3.2. Trading Activity; 3.3.3. Trading Prices; 3.3.4. Predicting Accuracy; 3.3.5. Discussion of Results; 3.4. Traders. 3.4.1. Field Study on Traders' Biases3.4.2. Traders' Nationality and Shareholdings; 3.4.3. Traders' Nationality and Trading Behavior; 3.4.4. Discussion of Results; 3.5. Trading Software; 3.5.1. User Interface; 3.5.2. Software Specification; 3.5.3. Hardware Specification; 3.5.4. General Requirements; 4. Applications of Prediction Markets; 4.1. Previous Fields of Application; 4.1.1. Short and Medium Term Forecasts; 4.1.2. Long Term Forecasts and Evaluation of Concepts; 4.2. Results from Selected Field Experiments; 4.2.1. STOCCER
A Sports Prediction Market; 4.2.1.1. The FIFA World Cup 2006. 4.2.1.2. The STOCCER Exchange4.2.1.3. Prediction Accuracy; 4.2.1.4. Arbitrage Opportunities; 4.2.1.5. Market-Making Traders; 4.2.2. PSM
The Political Stock Market; 4.2.2.1. Software Platform; 4.2.2.2. PSM and Irregular Activities; 4.2.2.3. Fraud: The 2004 Ukrainian Presidential Elections; 4.2.2.4. Manipulation: The 2007 Federal Swiss Elections; 4.2.2.5. Absorption speed of Events: The Euro '08; 4.2.3. AKX
The Australian Knowledge eXchange; 4.2.3.1. Water Availability in Australia; 4.2.3.2. Trading Platform; 4.2.3.3. Trading Activity and Prediction Accuracy; 4.2.3.4. Conclusion. 4.3. Creating Value with Prediction Markets in Service Industries4.3.1. Service Innovation with Idea Markets; 4.3.1.1. Idea Market Concept; 4.3.2. Market and Opinion Research; 5. Conclusion; Fields of application; Combining prediction markets with established forecasting methods; Information about the authors; Appendix A; Bibliography
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