Where is the post-election academic conference on prediction market performance?
Michael Giberson October 7th, 2008
So, where is the post-election party going to be?
No, I don’t mean the post-election gatherings by the candidates and their supporters, I mean the post-election gathering of academics and other researchers to assess what has been learned about the performance of prediction markets over the 2008 presidential campaign cycle.
I’ve checked the usual suspects and found nothing.
(The Southern Economic Association meeting this year is in Washington, D.C., a few weeks after the election. It would be an excellent time and place for an early post-mortem on the performance of prediction markets addressing the 2008 U.S. presidential election. But a look at the program doesn’t reveal any related panels. (The deadline for submission of abstracts was April 1, 2008.) In January 2008, the American Economic Association meetings featured a panel put together by Eric Zitzewitz. The next American Economic Association meeting is in San Francisco in January, but from my scan of the preliminary program no prediction market sessions are planned. (You really have to plan ahead for the AEA meetings, the deadline was February 28.))
This ongoing election cycle has featured an explosion of interest in political prediction markets, periodic allegations of manipulation and related analysis (and here, and here, and here, and here, etc.), innovations in market design (and disputations thereof) and various claims of market failure. A lot has happened. What have we learned?
Where is the post-election academic conference on prediction market performance?
(And, in a related question, where is the post-conference party going to be?)
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Great, a bombastic post.
Cool, if we can fix a date sign me up.
If Obama wins I guess it should be soon after the election in Washington DC so that we can bask in the perceived success of PM’s foresight. If McCain wins, then I propose a wet April afternoon in Hull.
A subset of the usual suspects will be in DC next week for a session, on 10/15 at 1:30pm, at the massive INFORMS meeting. Program is below
Prediction Markets
Sponsor: Optimization/ Networks
Sponsored Session
Chair: David Pennock, Yahoo!, 111 West 40th Street, 17th floor, New
York, NY, 10018, United States of America, pennockd@yahoo-inc.com
1 - Can You Beat the Market? Accuracy of Individual and Group
Post-prediction Market Judgments
Andreas Graefe, Institute for Technology Assessment and Systems
Analysis, Research Center (Forschungszentrum) Karlsruhe, PO
Box 3640, Karlsruhe, BW, 76021, Germany, graefe@itas.fzk.de,
J. Scott Armstrong
Research with prediction markets indicates that confidence in market results is
low. If so, it should be easy to improve market forecasts by posterior adjustments.
We conducted experiments to compare market accuracy with posterior individual
and group estimates. We hypothesized that posteriors would improve market
results. The results were contradictory with our hypotheses: Posteriors were less
accurate than the market results. Individuals performed even worse than simple
random guessing.
2 - Toward Info Accounting in Prediction Markets
Robin Hanson, Associate Professor of Economics, George Mason
University, MSN 1D3, Carow Hall,, Fairfax, VA, 22015,
United States of America, rhanson@gmu.edu
Prediction market business cases need numerical estimates not only of costs, but
also of business value. This requires estimates not only of accuracy
improvements, but also of the associated value of information. Organizations will
also need ways to estimate the value contributed by particular traders. Grounded
in concrete examples, I consider possible approaches to these information
accounting tasks.
3 - Using Prediction Markets to Track Information Flows:
Evidence from Google
Eric Zitzewitz, Professor of Economics, Dartmouth, 6106
Rockefeller Hall, Hanover, NH, 03755, United States of America,
eric.w.zitzewitz@dartmouth.edu, Bo Cowgill, Justin Wolfers
In the last 2.5 years, Google has conducted the largest corporate experiment with
prediction markets we are aware of. In this paper, we illustrate how markets can
be used to study how an organization processes information. We document a
number of biases in Google’s markets, most notably an optimistic bias. Newly
hired employees are on the optimistic side of these markets, and optimistic biases
are significantly more pronounced on days when Google stock is appreciating.
We find strong correlations in trading for those who sit within a few feet of one
another; social networks and work relationships also play a secondary
explanatory role. The results are interesting in light of recent research on the role
of optimism in entrepreneurial firms, as well as recent work on the importance
of geographical and social proximity in explaining information flows in firms and
markets.
4 - Combinatorial Betting
David Pennock, Yahoo!, 111 West 40th Street, 17th floor,
New York, NY, 10018, United States of America,
pennockd@yahoo-inc.com
I will survey our attempts to design combinatorial betting mechanisms that
support doubly exponentially many allowable bets and propagate information
appropriately across logically-related bets. The greater expressiveness comes at a
computational cost for the auctioneer, who faces a difficult matching problem. In
general, full expressiveness renders the matching problem intractable, though
some reasonable restrictions on expressiveness admit polynomial-time matching.
[...] F. Masse October 9th, 2008 INFORMS on prediction markets - Washington, D.C. - [...]
Also, John Ledyard is “preparing a plenary presentation on Prediction Markets for the Economic Science Association” presumably for the meetings coming up in Tucson, AZ in November.
While the event has the virtue (given the point of view of the post above) of being after the election, the ESA is focused on experimental economics and Ledyard says he is “interested only in scientific, experimental research and not in application, policy analysis, empirical analyses, or theory.”
So he won’t be giving us the post-election run down on prediction market performance, either.
(And the INFORMS session looks great. Too bad I’ve move 1700 miles away from Washington, D.C. and can’t readily drop in for the afternoon.)