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Great Background on Prediction Markets

Submitted by greggles on Sat, 01/26/2008 - 15:08

No code discussion here - just information on what prediction markets are. Especially in light of some recent criticisms from the Democratic New Hampshire primary election, this overview post on the Mercury blog is really informative. It walks through how to interpret prediction markets

One of the hardest things to do is understand how often you can lose when betting on a favourite. Let’s do some simple math:...95% - 1 in 20 favourites will lose

And discusses some of the more important things like timescale, necessary liquidity and participants for an accurate market, how to assess accuracy, and consideration for markets relative to other predictors.

This is some really great information on the subject. Thanks, Jed.

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