The prediction markets, also known as an idea in the future, is created by the purpose of assigning a value or the probability of the proposal. The cash assets are created that the final value is tied to a particular event (eg you Hillary Clinton win the Democratic nomination?) Or parameter (eg, open the weekend box office sales of "Sex and the City "). Current market prices are interpreted as a prediction of probability of the event or the expected value of the parameter. The prediction market is structured and the betting exchanges, and no risk to the Bookie. At first glance, the market is like predicting NASDAQ or a futures market for commodities with common measures, such as offer price, sale price, open interest and the trading volume. The information is expressed through the prices are considered by many researchers to be a fair and reasonably accurate estimate of actual things can happen. One of the most popular place for contracts in the market prediction politics. An academic prediction market sponsored by the University of Iowa is not enabled in a presidential race from 1988 with excellent results. Its average error in predicting the popular vote was only 1.4%.
The Gallup poll is an average error of 2.0% at the same time. Prediction markets work well in generating results of the vote, even if no vote to serve as a guide. For example, Australian bookmakers offering the market district level political career (no votes) and the resulting usage is very accurate. The trading volume of the market prediction of the date is not enough to make them realistic hedging instruments for investors. However, a growing interest in a series of innovative contracts in the market prediction. Major www.intrade.com Intrade prediction market is located in the UK. A wide range of economic and political measures to buy on their website. Intrade has a contract that allows investors to invest in the probability that the U.S. withdrawal in 2008.
Operated since August 2007, the current price seems to reflect the new data economic with reasonable speed and effectiveness. The table below shows the market consensus of U.S. recession have ranged from a probability of about 75% to 25%. In particular, the contract price began to sink in late April - just before the preliminary GDP growth for the first quarter was released on April 30. The communication of the statistics reveals that the U.S. economy continues to grow in first quarter - against the attitude of consensus market. The recession "price" continued to decline as positive earnings and key economic indicators are made public. Throughout the political front, both Intrade and the Iowa Electronic Market, Obama became the likely favorite to capture the Democratic nomination right after Super Tuesday. From memory, on the market called the winner before the end of the political class educated people. It's worth testing some current prices for survival in the near future.
Like the issue to press, the Intrade futures assign a 40% chance John McCain for president, while Barack Obama was given a 93% chance of Securing the Democratic nomination again. Many companies are applying the theory of market prediction of corporate events such as new product offerings. Research has found that gambling money is almost as effective as real money in achieving accurate results. Google is an example. Use the prediction market with participation of workers in the forecast date of product launch and estimate use products. Even if you are not ready to play, it is useful also to observe the collective wisdom of a broad base of participants. Market price is found insightful on the Internet and are likely to both private and public prediction market continues to expand.
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