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Title:Prediction markets for economic forecasting PDF Logo
Authors:Snowberg, Erik
Wolfers, Justin
Zitzewitz, Eric
Issue Date:2012
Series/Report no.:CESifo Working Paper: Monetary Policy and International Finance 3884
Abstract:Prediction markets - markets used to forecast future events - have been used to accurately forecast the outcome of political contests, sporting events, and, occasionally, economic outcomes. This chapter summarizes the latest research on prediction markets in order to further their utilization by economic forecasters. We show that prediction markets have a number of attractive features: they quickly incorporate new information, are largely efficient, and impervious to manipulation. Moreover, markets generally exhibit lower statistical errors than professional forecasters and polls. Finally, we show how markets can be used to both uncover the economic model behind forecasts, as well as test existing economic models.
Subjects:prediction markets
forecasting
JEL:C50
G14
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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