Prediction Markets

Wikipedia, the on-line encyclopedia, describes predictions markets this way.

Prediction markets are speculative markets created for the purpose of making predictions. Assets are created whose final cash value is tied to a particular event (e.g., will the next US president be a Republican) or parameter (e.g., total sales next quarter). The current market prices can then be interpreted as predictions of the probability of the event or the expected value of the parameter. Prediction markets are thus structured as betting exchanges, without any risk for the bookmaker. Other names for prediction markets include predictive markets, information markets, decision markets, idea futures, event derivatives and virtual markets.

Cass Stunstein, in Infotopia: How Many Minds Produce Knowledge (New York: Oxford University Press, 2006) says,

All over the world, private organizations are relying on prediction markets to foresee the likely fates of their own products and services. Verizon, for example, takes full advantage of its internal prediction markets, which forecast sales, launch dates for new produts, office openings, and much more. (p. 4)

On their face, prediction markets have a lot of potential for entrepreneurs. A prection market might shape their product offerings. A realtor might use a prediction market to give him or her ideas about the future of their practice or their industry. If you're interested in prediction markets, read the whole Wikipedia article, follow its links, and check out the Sunstein book.

And if something you read grabs you, post a comment.

All my professional activities are entrepreneurial. For real estate 2.0, go to www.yourstopforrealestate.com/blog and for my writer's blog, go to www.kearneymusicschoolmurders.blogspot.com