Prediction Markets: Does Money Matter?
نویسندگان
چکیده
The accuracy of prediction markets has been documented both for markets based on real money and those based on play money. To test how much extra accuracy can be obtained by using real money versus play money, we set up a real-world online experiment pitting the predictions of TradeSports.com (real money) against those of NewsFutures.com (play money) regarding American Football outcomes during the 2003–2004 NFL season. As expected, both types of markets exhibited significant predictive powers, and remarkable performance compared to individual humans. But, perhaps surprisingly, the play-money markets performed as well as the real-money markets. We speculate that this result reflects two opposing forces: real-money markets may better motivate information discovery while play-money markets may yield more efficient information aggregation.
منابع مشابه
A Field Experiment on Monetary Incentives in Prediction Markets
The results of recent studies on prediction markets are encouraging. Prior experience demonstrates that markets with different incentive schemes predicted uncertain future events at a remarkable accuracy. In this paper, we study the impact of different monetary incentives on the prediction accuracy in a field experiment. In order to do so, we compare three groups of users, corresponding to thre...
متن کاملAn Empirical Investigation of the Forecast Accuracy of Play-Money Prediction Markets and Professional Betting Markets
Prediction markets have proven high forecasting performance in many areas such as politics, sports and business-related fields compared to traditional instruments such as polls or expert opinions. The advantage of real-money prediction markets is to provide participants with a clear incentive to reveal their true opinion on the outcome of an event. However, it is to date unclear whether play-mo...
متن کاملPrediction Markets: How Do Incentive Schemes Affect Prediction Accuracy?
The results of recent studies on prediction markets are encouraging. Prior experience demonstrates that markets with different incentive schemes predicted uncertain future events at a remarkable accuracy. In this paper, we study the impact of different monetary incentives on the prediction accuracy in a field experiment. In order to do so, we compare three groups of users, corresponding to thre...
متن کاملStatistical Tests of Real-Money versus Play-Money Prediction Markets
Prediction markets are mechanisms that aggregate information such that an estimate of the probability of some future event is produced. It has been established that both real-money and play-money prediction markets are reasonably accurate. An SPRTlike test is used to determine whether there are statistically significant differences in accuracy between the two markets. The results establish that...
متن کاملThe Role of Monetary Incentives in Prediction Markets: A Time Series Approach∗
Prediction markets serve as popular devices to aggregate beliefs and to assess market estimated probabilities. By looking at the interaction between realand play-money prediction markets, this paper shows that traded volume has a significant positive effect on the probability of realand play-money market cointegration. This indicates that the information aggregation process, eliminating individ...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
عنوان ژورنال:
- Electronic Markets
دوره 14 شماره
صفحات -
تاریخ انتشار 2004