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The power of prediction markets

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Re: The power of prediction markets

#21

Post by hueving »

HSO wrote: post #20
wyldfire wrote: post #17

Earlier quoted context omitted.

I agree with your logic but perhaps they consider the magnitude of the actual Brexit referendum vote to refute the prediction 'stay' likelihood of 85%. I don't know how close the election was (IIRC it was fairly close), I'm just stating that many people might consider a landslide in the other direction to mean that the prediction was flawed. OTOH maybe people misinterpreted the 'stay' likelihood itself as the ratio o…

It was very close, something like 51:49. The predictions circulating before the vote may have influenced the result. Apparently more Remainers would have bothered to vote if the predictions had not been so clearly in favor of Remain. It's a tragedy, really, that something so important would be decided on so flippantly. This, by the way, is another weakness (or limitation) of prediction markets. They should probably n…

Or more of the exiters would have voted if they weren't discouraged by being told it was a big loss. That sword cuts both ways.

Re: The power of prediction markets

#22

Post by hueving »

n00b101 wrote: post #3

Here is a US election prediction market: http://tippie.biz.uiowa.edu/iem/ The "Winner Takes All" market predicts Trump vs Clinton presidency: https://iemweb.biz.uiowa.edu/graphs/graph_Pres16_WTA.cfm According to this, after last night's performance, Trump has an 8% probability of becoming the 45th President of the United States of America, while Clinton has a 92% probability.

How big is the pool of participants in that particular market? It's not that interesting if it's only 20 or so participants.

Re: The power of prediction markets

#23

Post by [deleted] »

hueving wrote: post #21
HSO wrote: post #20

Earlier quoted context omitted.

It was very close, something like 51:49. The predictions circulating before the vote may have influenced the result. Apparently more Remainers would have bothered to vote if the predictions had not been so clearly in favor of Remain. It's a tragedy, really, that something so important would be decided on so flippantly. This, by the way, is another weakness (or limitation) of prediction markets. They should probably n…

Or more of the exiters would have voted if they weren't discouraged by being told it was a big loss. That sword cuts both ways.

[deleted]

Re: The power of prediction markets

#24

Post by zbyte64 »

hueving wrote: post #22
n00b101 wrote: post #3

Here is a US election prediction market: http://tippie.biz.uiowa.edu/iem/ The "Winner Takes All" market predicts Trump vs Clinton presidency: https://iemweb.biz.uiowa.edu/graphs/graph_Pres16_WTA.cfm According to this, after last night's performance, Trump has an 8% probability of becoming the 45th President of the United States of America, while Clinton has a 92% probability.

How big is the pool of participants in that particular market? It's not that interesting if it's only 20 or so participants.

Couldn't find the number of participants but over 100,000 shares have been issued: https://iemweb.biz.uiowa.edu/WebEx/marketinfo_english.cfm?Ma...

Re: The power of prediction markets

#25

Post by sinak »

rojobuffalo wrote: post #10

I think I heard Nick Bostrom mention the idea of using prediction markets in the legislature, and it sounded like a good idea.

Robin Hanson proposed a type of government based on prediction markets that he calls Futarchy [1]. Vitalik Butalin has suggested it as a governance structure for DAOs [2].

[1] http://mason.gmu.edu/~rhanson/futarchy.html

[2] https://blog.ethereum.org/2014/08/21/introduction-futarchy/

Re: The power of prediction markets

#26

Post by jedc »

n00b101 wrote: post #4
hardtke wrote: post #2

One place I'd love to try prediction markets is with product changes undergoing A/B tests. A product manager could submit an experiment and people at the company could bet on what the product change will do to engagement/revenue/growth metrics. This framework could eventually be used to weed out product changes before they are built. It would be particularly useful when the product change is driven by the leadership…

Enterprise Prediction Markets have been a thing for a long time. There are existing enterprise software vendors [1], it is known that Google has an internal prediction market [2], and there is a wealth of academic literature on corporate prediction markets [3] [1] https://www.crowdworx.com/prediction-market-software-consult... [2] https://www.quora.com/What-does-Google-use-prediction-market... [3] http://marginalrevo…

Google had an internal prediction market. It hasn't operated for many, many years.

Re: The power of prediction markets

#27

Post by vegabook »

RyanCavanaugh wrote: post #13

> Prediction markets have also had some high-profile misfires, however — such as giving the odds of a Brexit ‘stay’ vote as 85% on the day of the referendum I'm continuously annoyed by this. The prediction was 85%, not 100%. I'm guessing if you looked at all the 85% predictions, about 15% of the time the other outcome happened. That's what 85% means, after all. You can't just round all predictions to the nearest inte…

The nuance though is the direction in which the market moved. On the day, the market went from 20% for Brexit in the morning to 10% by the evening for Brexit. And this trend had been in place for about 10 days (ie Brexit losing ground). So you'd think that as an event draws closer, the prediction odds would tend towards the outcome, not diverge from it.

Re: The power of prediction markets

#28

Post by evandijk70 »

vegabook wrote: post #27
RyanCavanaugh wrote: post #13

> Prediction markets have also had some high-profile misfires, however — such as giving the odds of a Brexit ‘stay’ vote as 85% on the day of the referendum I'm continuously annoyed by this. The prediction was 85%, not 100%. I'm guessing if you looked at all the 85% predictions, about 15% of the time the other outcome happened. That's what 85% means, after all. You can't just round all predictions to the nearest inte…

The nuance though is the direction in which the market moved. On the day, the market went from 20% for Brexit in the morning to 10% by the evening for Brexit. And this trend had been in place for about 10 days (ie Brexit losing ground). So you'd think that as an event draws closer, the prediction odds would tend towards the outcome, not diverge from it.

If this were always true, it could very easily be turned into a profitable betting strategy.

Re: The power of prediction markets

#29

Post by joelthelion »

One very good prediction market is Hypermind [1]:

* It's not an open panel. You can apply for an account, but you will be screened. This removes the noise from people who just want to try out prediction markets.

* Contestants don't play for real money. I believe this improves predictions by removing biases due to having real financial stakes in the outcomes.

I also like the fact that it's a real prediction market based on trading and not one of those systems where you have to update your predictions all the time. In a prediction market, you just trade when you see a potential benefit, and the power of the market does the rest.

The only issue I have with it is that the site is so damn slow...

[1] https://hypermind.lumenogic.com/hypermind/app.html#welcome

(Edited the link. Whoever made this site is really completely clueless about web programming...)

Re: The power of prediction markets

#30

Post by harperlee »

catwell wrote: post #5

The "guess the number of jelly beans in a jar" game gave its name to one of the startups whose failure disappointed me the most, Beansight. In 2010, it was asking people their opinion on various topics, attributing them experience points when they guessed right, and using this information about the expertise of its users to improve its predictions.

I love the name! Sounds like insight, and when you need to go and clarify the spelling to someone familiar with the company, you have a great story to tell that is completely related to what the company does. Genius.

Edit: Nevermind, the "classical story to tell" that I had in mind was with Francis Galton and the weight of an ox: https://en.m.wikipedia.org/wiki/Wisdom_of_the_crowd#Classic_...

Cool name nonetheless.

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