Prediction Markets

Paper Summary:

The paper examines prediction markets and prediction market characteristics in order to compare them to supply and demand concepts in terms of market forecasting. The paper discusses monopolistic markets in order to better develop the comparison between prediction markets and traditional supply and demand models. The paper concludes by explaining how prediction markets have certain inherent characteristics that make them attractive as alternatives to traditional macroeconomic theory.

Outline:
Background Context
Reflection on Standard Supply & Demand
Discussion & Conclusions

From the Paper:

"Prediction markets are a fairly novel concept that has been borne out of the new economy but, in one respect or another, they have existed in some fashion throughout history. Prediction markets are sometimes known as information markets, idea markets or concept futures, or even event futures and are based on open markets wherein market participants trade in contracts that are valued according to the likelihood of future events (Ho & Chen, 2007). Currently, the most predominantly recognized prediction markets relate to general elections where traders market contracts that pay a certain amount if a given candidate wins or loses. However, a prediction market can be developed in relation to any commodity or financial device."

Sample of Sources Used:

• Creswell, S. (2006). RIMDEX to Predict the Market. ICIS Chemical Business, 34/1, p.40.
• Geisst, C. (2000). Monopolies in America: Empire Builders and Their Enemies, from Jay Gould to Bill Gates. Oxford: Oxford University Press.
• Ho T. & Chen K. (2007). New Product Blockbusters: The Magic and Science of Prediction Markets. California Management Review, 50/1, p.144.
• Hopman J. (2007). Using Forecasting Markets to Manage Demand Risk. Intel Technology Journal, 11/2, p.127.
• Johnson D. & Turner D. (2003). International Business: Themes and Issues in the Modern Global Economy. London: Routledge.

More papers on Prediction Markets:

• Essay # 137337 : "Prediction Markets"
• Essay # 15470 : "Interest Rate Prediction"
• Analytical Essay # 141668 : "Predictive Futures Market"

APA Citation:

MLA Citation: