Check that CFM page for updates. And contact me so I can make additions to the list. (I’ll then re-publish that updated list on Midas Oracle.)

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• Michael Abramowicz – Michael B. Abramowicz – (Law School, George Washington University, Washington, D.C., U.S.A.) — Post Archives at Midas Oracle
• Bernd H. Ankenbrand – Bernd Ankenbrand – (Lecturer, Witten/Herdecke University, Germany, E.U.) — Post Archives at Midas Oracle
• James Annan – (Global Environment Modelling Research Program, Frontier Research Center for Global Change, Japan)
• Werner Antweiler – (UBC Election Stock Market, Sauder School of Business, University of British Columbia, Vancouver, Canada)
• Kenneth J. Arrow – Kenneth Arrow – (Economics Department, Stanford University, California, U.S.A.)
• Tom W. Bell – Tom Bell – (Law School, Chapman University, California, U.S.A.) — Post Archives at Midas Oracle
• Joyce E. Berg – Joyce Berg – Profile – (Iowa Electronic Markets, Accounting, Henry B. Tippie College of Business, University of Iowa, Iowa, U.S.A.)
• Richard Borghesi – (Finance, Texas State University at San Marcos, Texas, U.S.A.) — Post Archives at Midas Oracle
• Kay-Yut Chen – (Information Services & Process Innovation Lab, HP Labs, HP, California, U.S.A.)
• Yiling Chen – (Micro-Economic and Social Systems, Yahoo! Research Labs, New York, U.S.A.) — Post Archives at Midas Oracle
• Eric Crampton – (Department of Economics, University of Canterbury, New Zealand) — Post Archives at Midas Oracle
• Ely Dahan – (Marketing, Anderson School, University of California at Los Angeles, Los Angeles, California, U.S.A.)
• Anita Elberse – (Marketing, Harvard Business School, Harvard University, Massachusetts, U.S.A.)
• Leslie R. Fine – Leslie Fine – (Information Dynamics Lab, HP Labs, California, U.S.A.)
• Gary William Flake – Gary W. Flake – Gary Flake – (MicroSoft, U.S.A.)
• Robert Forsythe – (Dean, College of Business Administration, University of South Florida, Florida, U.S.A.) — Previously: (Economics, Iowa Electronic Markets, Henry B. Tippie College of Business, University of Iowa, Iowa, U.S.A.)
• Lance Fortnow – Lance J. Fortnow – (Department of Electrical Engineering and Computer Science, McCormick School of Engineering, Northwestern University, Illinois, U.S.A.)
• Keith Jacks Gamble – Keith Gamble – (Economics (University of California at Berkeley) – California, U.S.A. — Post Archives at Midas Oracle
• Michael Gorham – (IIT Center for Financial Markets, Stuart School of Business, Illinois Institute of Technology, Illinois, U.S.A.) — Previously: (CFTC)
• Thomas S. Gruca – Thomas Gruca – Profile – (Iowa Electronic Markets, Marketing, Henry B. Tippie College of Business, University of Iowa, Iowa, U.S.A.)
• Refet Gurkaynak – (Department of Economics, Bilkent University, Turkey)
• Friedrich August Von Hayek — R.I.P. — The market as an information aggregation tool: The Use of Knowledge in Society —
• Robert W. Hahn – Robert Hahn – (Executive Director, Reg-Markets Center, American Enterprise Institute, Washington, D.C., U.S.A.) — Post Archives at Midas Oracle
• James D. Hamilton – James Hamilton – (Department of Economics, University of California at San Diego – California, U.S.A.) — Post Archives at Midas Oracle
• Robin Hanson – Robin D. Hanson – (Economics, James M. Buchanan Center, George Mason University, Virginia, U.S.A.) — Post Archives at Midas Oracle
• M. Todd Henderson – (Law School, University of Chicago, Chicago, Illinois, U.S.A.)
• Chris Hibbert – (Software Architect, Zocalo Project Manager, California, U.S.A.) — Post Archives at Midas Oracle
• Charles Holt – Charles A. Holt – (Department of Economics, University of Virginia, Virginia, U.S.A.)
• Bernardo A. Huberman – Bernardo Huberman – (Social Computing Lab, HP Labs, California, U.S.A.)
• Frédéric Koessler – (Economics, Centre Nationale de la Recherche Scientifique, France, E.U.)
• Anthony M. Kwasnica – Anthony Kwasnica – (Business Economics, Department of Insurance and Real Estate, Smeal College of Business Administration, Penn State University, Pennsylvania, U.S.A.)
• Nicolas Lambert – (Department of Computer Science, Stanford University, California, U.S.A.)
• John O. Ledyard – John Ledyard – (Economics and and Social Sciences, Division of Humanity and Social Sciences, California Institute of Technology, California, U.S.A.)
• Andrew Leigh – (Economics, Research School of Social Sciences, Australian National University, Australia)
• Steven Levitt – Steve Levitt – Steven D. Levitt – (Economics, Director of the Becker Center on Chicago Price Theory, Graduate School of Business, University of Chicago, Illinois, U.S.A.)
• Saul Levmore – (Law School, University of Chicago, Illinois, U.S.A.)
• Robert E. Litan – Robert Litan – (Vice President for Research and Policy, Kauffman Foundation, Kansas City, Missouri, U.S.A.)
• Thomas W. Malone – Thomas Malone – Tom Malone – (MIT Center for Collective Intelligence, Management, MIT Sloan School of Management, Massachusetts Institute of Technology, Massachusetts, U.S.A.)
• Charles F. Manski – Charles Manski – (College of Arts and Sciences, Norwestern University, Illinois, U.S.A.)
• Adam Meirowitz – (Department of Politics, Princeton University, New Jersey, U.S.A.)
• Paul Milgrom – (Department of Economics, Stanford University, California, U.S.A.)
• Tracy Mullen – (Information Sciences and Technology, Penn State University, Pennsylvania, U.S.A.)
• Forrest Nelson – Profile – (Iowa Electronic Markets, Economics, Henry B. Tippie College of Business, University of Iowa, Iowa, U.S.A.)
• George R. Neumann – George Neumann – Profile – (Iowa Electronic Markets, Economics, Henry B. Tippie College of Business, University of Iowa, Iowa, U.S.A.)
• Ryan Oprea – Profile – (Director of the LEEPS laboratory, Economics, University of California at Santa Cruz, California, U.S.A.)
• Gerhard Ortner – (University of Applied Sciences, Austria, E.U.)
• Marco Ottaviani – (Management and Strategy, Kellogg School of Management, Northwestern University, Illinois, U.S.A.) – Formerly: (Economics Department, London Business School, United Kingdom, E.U.) — Post Archives at Midas Oracle
• David Paton – (Industrial Economics, Business School, Nottingham University, United Kingdom, E.U.)
• David M. Pennock – David Pennock – (Principal Research Scientist, Micro-Economic and Social Systems, Yahoo! Research Labs, New York, U.S.A.) — Post Archives at Midas Oracle
• Charles R. Plott – Charles Plott – (Economics and and Social Sciences, Division of Humanity and Social Sciences, California Institute of Technology, California, U.S.A.)
• David Porter – (Economics and Finance, Chapman University, California, U.S.A.)
• Todd Proebsting – Todd A. Proebsting – (Microsoft & University of Arizona, U.S.A.)
• Russ Ray – (Finance, College of Business, University of Louisville, Kentucky, U.S.A.)
• Daniel Reeves – (Micro-Economic and Social Systems, Yahoo! Research Labs, New York, U.S.A.) — Post Archives at Midas Oracle
• Paul W. Rhode – Paul Rhode – (US Economic History, College of Management, The University of Arizona, Arizona, U.S.A.) – Formerly: (University of North Carolina, North Carolina, U.S.A.)
• Thomas A. Rietz – Thomas Rietz – Profile – (Iowa Electronic Markets, Finance, Henry B. Tippie College of Business, University of Iowa, Iowa, U.S.A.)
• Richard Roll – (University of California at Los Angeles, Los Angeles, California, U.S.A.)
• Thomas W. Ross – Thomas Ross – (UBC Election Stock Market, Sauder School of Business, University of British Columbia, Vancouver, Canada)
• Rahul Sami – (School of Information, University of Michigan, Michigan, U.S.A.)
• Sam L. Savage – Sam Savage – (Consulting Professor, Stanford U., California, U.S.A.) — Post Archives at Midas Oracle
• Thomas C. Schelling – Thomas Schelling – (Economics, School of Public Affair, University of Maryland, Maryland, U.S.A.)
• Emile Servan-Schreiber – (NewsFutures, New York City, New York, U.S.A. & Paris, France, E.U.) — Post Archives at Midas Oracle
• Robert J. Shiller – Robert Shiller – Profile – (Economics, Yale University, Connecticut, U.S.A.)
• Bernd Skiera – (Electronic Commerce, Goethe University, Germany, E.U.)
• Vernon L. Smith – Vernon Smith – (Economics, Economic Science Institute, Chapman University, California, U.S.A.)
• Erik Snowberg – (Stanford University, California, U.S.A.) — Soon at CalTech
• Peter Norman Sorensen – (Finance, Department of Economics, University of Copenhagen, Denmark, E.U.)
• Martin Spann – (Marketing and Innovation, University of Passau, Germany, E.U.)
• Koleman Strumpf – Koleman S. Strumpf – (Economics, School of Business, University of Kansas, Kansas, U.S.A.) – Formerly: University of North Carolina, North Carolina, U.S.A.) — Post Archives at Midas Oracle
• Cass Sunstein – Cass R. Sunstein – (Law School, University of Chicago, Chicago, Illinois, U.S.A.)
• James Surowiecki – (The Wisdom Of Crowds) – (New York, U.S.A.)
• Paul C. Tetlock – Paul Tetlock – (Finance, Business School, University of Texas at Austin, Texas, U.S.A.) — Post Archives at Midas Oracle
• Philip Tetlock – Philip E. Tetlock – (Leadership, University of California at Berkeley, California, U.S.A.)
• Hal R. Varian – Hal Varian – (Chief Economist, Google, California, U.S.A.) — Formerly: (Haas School of Business, Department of Economics, University of California at Berkeley, California, U.S.A.)
• Dorina Tila – (Economics, George Mason University, Virginia, U.S.A.)
• Leighton Vaughan-Williams – (Economics and Finance, Business School, Nottingham Trent University, United Kingdom, E.U.)
• Michael Wellman – Michael P. Wellman – (Computer Science and Engineering, University of Michigan, Michigan, U.S.A.)
• Justin Wolfers – Justin J. Wolfers – (Business and Public Policy, Wharton Business School, University of Pennsylvania, Pennsylvania, U.S.A.) — Post Archives at Midas Oracle
• Eric Zitzewitz – Eric W. Zitzewitz – (Economics, Dartmouth College, Massachusetts, USA) – Formerly: (Stanford University, California, U.S.A.) — Post Archives at Midas Oracle

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Almost all of the serious people who study or work with these markets are not in the “markets are magic” camp.

My work in this area (with Justin Wolfers usually and Andrew Leigh and Erik Snowberg occassionally) uses these markets as a way of quantifying the conventional wisdom.

This has more value than may be immediately apparent. It can help you get from “the market rose 0.25% in response to Obama’s Iowa victory” to “the market rose 0.25% in response to Obama’s Iowa victory, which raised his nomination probability by 20% and did not affect the Democrats odds of winning in November” to an estimate of how much more stocks will be worth under Obama than Edwards or Clinton.

In corporate settings, a market can help turn something that “everyone knows” into an objective fact that can then be acted upon. The best example is probably markets on whether software projects will be completed on time; if a market run among the project team members says that the launch will be 2 months late, it becomes harder for the project manager to insist that everything is on track.

Eric Zitzewitz
Assoc. Prof. of Econ
Dartmouth College

Thanks to Jason Ruspini for the link. Jason also posted a comment on Paul Krugman’s post, and also on Felix Salmon’s post.

[...] the polls got 12 seats wrong, while the markets got 7 seats wrong [...]

Previously: Justin Wolfers Country has turned Left… as predicted by the prediction markets.

And here is Andrew Leigh’s hilarious comment:

Extraordinary stuff. Actually, now that I think about it, wasn’t there something in your Melbourne Business School magazine about this recently?

Midas Oracle covered it at the time… OF COURSE.

This post is filed in the “humor” category. The author of the blog post knows prediction markets very well. Here’s Joshua Gans’ website.

But if that is the case, then why all the gambling/prediction market interest in the fates of two fictional characters – Harry Potter and Tony Soprano – and their equally fictional associates?

These fictional worlds do not produce widely dispersed bits of information that can be usefully aggregated by a market. Careful study of, say, the first six Harry Potter books and reading interviews with J.K. Rowling may produce some sense of what will happen, but ultimately whether “Harry Potter must die” (as Marginal Revolution suggested) or “Harry Potter will NOT die!” (as Chris. F. Masse at Midas Oracle interprets prediction market prices to suggest) will depend on what Rowling wants to say through the book and how she decides to do it.

I don’t think there is sufficient information available to form a good probability estimate. So the betting is all based on emotion, and some bettors will be lucky and others not. An informed insider can enter the market and clean up.

A lot of people enjoy betting on entertainment events (a category broad enough to include everything from the Super Bowl winner to week-end movie box office totals to the survivor/winner in the TV show “Hell’s Kitchen), and far be it from me to want to squash people’s fun. Fun is good (and good for business if you are a prediction market maker).

But if you are an investor trying to maximize long term returns and have no inside information, this is a case where Kelly’s criterion for betting comes into play. Kelly’s criterion for bet size can be described as “edge over odds,” implying, as Wikipedia explains: “If the gambler has no edge, … then the gambler should bet nothing.”

[NOTES: This post is a lightly edited version of "Will Harry Potter Die? Don't Bet on It," originally posted at Knowledge Problem.

The Wolfers and Leigh piece provides a good general background on prediction markets. HT to Midas Oracle for the heads up on the Wolfers and Leigh article.

Also at Marginal Revolution: Tony Soprano must live, citing a Washington Post story among others.]

Read prawf Tom Bell’s take on the prediction market petition, circa last month, for more info.

[...] Last year, for instance, the aggregate of small bettors who placed wagers on electoral results on TradeSports, a Web-based market, forecasted the outcome of every U.S. Senate race correctly. Companies like Best Buy, the electronics retailer, now maintain in-house markets where employees bet on how products will sell. The results help with pricing and inven­tory decisions. Wolfers says that companies have shifted to pre­diction markets because they work better than the traditional means for gathering data and making forecasts, such as sales meetings. [**] “Think of what a meeting is,” Wolfers says. “It’s some fat, obnoxious guy who talks for three minutes despite the fact that he knows nothing. In the meantime, there’s a woman who sits in the back and says nothing because she may feel her opinion isn’t taken into account. And then there’s the brown-noser, who wants to be senior VP and will say anything the boss wants to hear.” When you set up a prediction market in which employees bet actual cash, you weed out those who don’t know anything. As for the sycophant: if the boss isn’t watching, he’s more likely to bet what he really thinks. With a prediction market, everyone brings a small piece of information to the table, and the consensus [**] proves surprisingly accurate. [...]

[...] Zitzewitz says it was Wolfers’s idea to use an online prediction market to assess the economic impact of the war in Iraq, before the U.S. invaded. Up to that point, academics had only used predic­tion markets for retrospective insight into historical events. But in the Iraq study, which Zitzewitz and Wolfers wrote with Australian economist Andrew Leigh, the authors used markets to evaluate the cost of a policy before it was instituted—an approach that suggests such markets could be used to guide policy. They noted that prices of oil on futures mar­kets implied a belief that an oil price spike caused by war would dissipate after about 18 months, limiting the size of an “oil dividend.” This prediction, as it happens, has not been borne out by events—oil is still well above its pre-war prices. But analysts believe that today’s prices may be due to other factors that were not considered before the Iraq war, includ­ing the disruptions caused by Hurricane Katrina. [...]

[**] I wonder whether the word “consensus” is appropriate.

[...] a general agreement among the members of a given group or community, each of which exercises some discretion in decision making and follow-up action.

[*] As I wrote this morning, firms see their internal prediction markets as a strategic forecasting tool.

The quality of presenters is excellent and the workshop has succeeded in attracting high level contributions. The program and complete list of papers to be presented are available here, while directly related to prediction markets papers are:

• Are Political Markets Really Superior to Polls as Election Predictors? by Bob Erikson, Columbia University and Chris Wlezien, Temple University
• Optimal Price Setting in Fixed-Odds Betting Markets Under Information by Raphael Markellos and Vasiliki A. Makropoulou, Athens University of Economics and Business
• Hitting Home Runs and the Art of Corporate Valuation: Do Managers or the Prediction Market Make Better Predictions? by Orly Sade, New York University and Hebrew University
• Prediction Markets as a Tool for Management of Political Risk by Ole Jakob Bergfjord, Norwegian School of Economics
• Public Signal Bias and Prediction Market Accuracy by Tom Gruca and Joyce E. Berg, University of Iowa
• Ignorance Prior Bias in Prediction Markets by Lionel Page, University of Westminster
• An Analysis of Tradesports’ 2005-06 National Football League Prediction Market by Feng Zhou and Philip O’Connor, University of Waikato
• Testing the Efficiency of Markets in the 2002 World Cup by Steve Levitt, University of Chicago and Ricard Gil, University of California at Santa Cruz
• Price Formation in Sports Prediction Markets: A Cross-Cultural Study by Stefan Luckner, University of Karlsruhe
• Socially Embedded Prediction Markets by Yiling Chen and David M. Pennock, Yahoo! Research
• Manipulators Increase Information Market Accuracy by Robin Hanson, George Mason University and Ryan Oprea, University of California, Santa Cruz
• Is There a Favorite-Longshot Bias in Election Prediction Markets? by Justin Wolfers, University of Pennsylvania, Eric Zitzewitz, Stanford University and Andrew Leigh, Australian National University
• Using Markets to Inform Policy: The Case of the Iraq War by Eric Zitzewitz, Stanford University and Justin Wolfers, University of Pennsylvania

The exponential pattern of growth recorded in my literature review of the field remains consistent, at least.

Cross-posted from gtziralis.com.

- Why is it that BetFair (the world’s #1 prediction exchange, a.k.a. betting exchange) is not cited?

- Could you share with us evidence that the BetFair prediction markets are not accurate (if that’s the reason why BetFair is not cited)?

- Would you mind stating for the record the reason why you cite TradeSports-Intrade and not BetFair? Thanks.

The past decade has seen a healthy growth in the field, including a sharp rise in publications and events, and the creation of the Journal of Prediction Markets. Academic work includes mechanism design, experimental (laboratory) studies, field studies, and empirical analyses. In industry, several companies including Eli Lilly, Corning, HP, Microsoft, and Google have piloted internal prediction markets. Other companies, including ConsensusPoint, InklingMarkets, NewsFutures, and TradeSports, base their business on providing public prediction markets, prediction market software solutions, or consulting services. The growth of the field is reflected and fueled by a wave of popular press articles and books on the topic, most prominently Surowiecki’s “The Wisdom of Crowds”.

Reminder: As I predicted before the event, at the time, last year, BetFair was not cited once at the 2006 Yahoo!’s confab on prediction markets.

To My Readers: Midas Oracle .ORG is the only vertical spot on prediction markets that has a truly global perspective.

Next: FOUR U.S. SCHOLARS ACCUSED OF ANTI-HSX BIAS + FOUR U.S. SCHOLARS ACCUSED OF ANTI-BETFAIR BIAS

Addendum: Justin Wolfers comments…

For what it is worth, in a paper with Andrew Leigh, we do analyze BetFair data. Take a look at figure 2 in http://bpp.wharton.upenn.edu/jwolfers/Papers/AustralianElection2004.pdf.

I don’t think that there is an anti-BetFair bias, but rather it is a question of finding which sources have the most useful data for the research question at hand. For those of us in the US, Intrade has a stronger focus on the US, while BetFair is more useful for those in the UK, or – as in the above paper – for those in Australia.