Can NewsFutures Really Predict the Future?
… asks ABC News (4 pages):
[...] NewsFutures creator Emile Servan-Schreiber believes that prediction markets like his are the “future of journalism.” [*] “It gives people the news of today and lets them give you the news of tomorrow in a probabilistic fashion by asking them to take bets on what is going to happen,” Servan-Schreiber said. [...]
While the money earned on NewsFutures isn’t real, Servan-Schreiber argues that prediction markets are an incredibly valuable tool. “I think of them as a brain,” he said. “You take a bunch of individually stupid neurons and put them together. Through massive interaction emerges intelligence. It’s the same thing with the market.” “The market really is smarter than the average player in there, and sometimes smarter than anyone in there, even the best player,” he said. This aggregation of many people’s opinions, Servan-Schreiber argued, produces an “incredible probability that the market prices really corresponds to the probability [of the event occurring].” [...]
“If you know nothing, you don’t participate,” he said. “It’s self-selection all the way. If you think you know something, and you don’t, you get eliminated very quickly.” [...]
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[*] Prediction markets are one of the many futures of journalism, I would say. Like Emile, I’m bullish on prediction market journalism. But, as I implied in my previous post (where I cited extensively the meager but smiling Mike Linksvayer), PMJ is not for everyone —it should be the response to specific needs.
An other little remark. If I agree that prediction market journalism has a future, I would say that it won’t pass by the so-called “mainstream media”. Indeed, look at their first page, where they cited prediction markets and their prices/probabilities: ABC News didn’t link to those prediction markets.
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Here’s my own short selection of NewsFutures prediction markets…
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Some delegates from FL or MI will be seated at the Democratic Convention.
© NewsFutures
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CERN will find the Higgs particle first.
© NewsFutures
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Microsoft will buy Yahoo! in 2008.
© NewsFutures
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A agree with your comments Chris.
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Prediction markets will only be reliable (as much as they can be) when people are “playing” with real money IMO. Real money acts as an incentive to get it right, in other words – it forces us to make a balanced and objective decision, generally speaking.
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I know there are some people who would disagree with that, but that could be because they haven’t had the opportunity to ”play for real”.
Have studies been performed that have investigated the effect of real- vs playmoney on the reliability of predictions ?Â
@medemi: Surprisingly, liquid-enough the play-money prediction markets are as accurate as the real-money prediction markets.
How about when we hold a gun to their heads, any improvement then ?
Just kidding….