Comments on: The Uses and Limits of Prediction Markets in Forecasting http://futuresavvy.net/2008/08/the-uses-and-limits-of-prediction-markets-in-forecasting/ Making better decisions to manage uncertainty and profit from change Thu, 17 May 2012 22:58:38 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: zyxo http://futuresavvy.net/2008/08/the-uses-and-limits-of-prediction-markets-in-forecasting/comment-page-1/#comment-6494 zyxo Mon, 08 Dec 2008 19:42:49 +0000 http://www.futuresavvy.net/?p=59#comment-6494 Interesting : In the paragraph about the limits of prediction markets, you could easily change the words "prediction markets" by "data mining". It would stay correct. The advantages : prediction markets are like data mining, but with the advantage of random forests of natural neural networks : a lot of models, each with another sample of observations and predicting variables. And with the second advantage that you do not need to calculate all those little models : they are in the heads of the participants and come to you to form the global prediction. Interesting : In the paragraph about the limits of prediction markets, you could easily change the words “prediction markets” by “data mining”. It would stay correct.

The advantages : prediction markets are like data mining, but with the advantage of random forests of natural neural networks : a lot of models, each with another sample of observations and predicting variables. And with the second advantage that you do not need to calculate all those little models : they are in the heads of the participants and come to you to form the global prediction.

]]> By: Darin http://futuresavvy.net/2008/08/the-uses-and-limits-of-prediction-markets-in-forecasting/comment-page-1/#comment-6189 Darin Mon, 29 Sep 2008 03:41:58 +0000 http://www.futuresavvy.net/?p=59#comment-6189 Very interesting article. Just wondering who would benefit from this tool the most? Very interesting article. Just wondering who would benefit from this tool the most?

]]> By: Chris Hibbert http://futuresavvy.net/2008/08/the-uses-and-limits-of-prediction-markets-in-forecasting/comment-page-1/#comment-55 Chris Hibbert Thu, 21 Aug 2008 00:06:01 +0000 http://www.futuresavvy.net/?p=59#comment-55 Early on in the article you point out that markets aggregate all the available information about the value of an asset, but then you say that long term questions are harder to predict. The examples you give: president in 2012 or gas prices in two years aren't ones where I'd use a prediction market, but not because they're long term. No one knows much about the 2012 race, so there isn't much useful info to aggregate, and the best predictions for the price of oil are the financial futures. The predictions two years or more out aren't that great, but they're the best indicator available if you need a guess on which to make a decision. There are other questions on which long term claims can be useful. If people are interested and knowledgeable, then the best projection would probably come from a market. Want to know hotel occupancy levels in 2015 at some vacation destination or the price per gigabyte of memory three years from now? I don't think you'd get a better answer by paying a research group to do a survey than by funding a market to answer the question. And as you said, the value will be constantly updated and will incorporate any information released by market research groups. Early on in the article you point out that markets aggregate all the available information about the value of an asset, but then you say that long term questions are harder to predict. The examples you give: president in 2012 or gas prices in two years aren’t ones where I’d use a prediction market, but not because they’re long term. No one knows much about the 2012 race, so there isn’t much useful info to aggregate, and the best predictions for the price of oil are the financial futures. The predictions two years or more out aren’t that great, but they’re the best indicator available if you need a guess on which to make a decision.

There are other questions on which long term claims can be useful. If people are interested and knowledgeable, then the best projection would probably come from a market. Want to know hotel occupancy levels in 2015 at some vacation destination or the price per gigabyte of memory three years from now? I don’t think you’d get a better answer by paying a research group to do a survey than by funding a market to answer the question. And as you said, the value will be constantly updated and will incorporate any information released by market research groups.

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