Midas Oracle is incontestably [*] the best vertical portal to prediction markets.

Chris F. Masse — Thu, 21 Feb 2008 18:59:28 +0000

This site has more than you need to know about futures markets and the subtle point that they donâ€™t predict but rather capture what people think will happen. Clear?

My dual strategy is paying off.

Presenting a prediction market chart associated with an explainer about prediction markets on the blog frontpage —on top of the daily posts, making the reading of this introductory material compulsory for our visitors.
Publishing, again, the explainer on prediction markets on top of the page grouping the current prediction market charts. This “predictions” page has been the more popular material on Midas Oracle, these last 30 days.

[*] Overcoming Bias and Freakonomics are not prediction market blogs. And they didn’t take my challenge to comment on the BetFair Starting Prices.

Prediction Markets 101

Chris F. Masse — Sat, 12 Jan 2008 10:28:28 +0000

Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that traders bring when they agree on prices. Prediction markets are meta forecasting tools that feed on advanced indicators (like polls and surveys). Garbage in, garbage out… Intelligence in, intelligence out…

A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative can be interpreted as the objective probability of the future outcome (i.e., its most statistically accurate forecast). A 60% probability means that, in a series of events each with a 60% probability, then 60 times out of 100, the favored outcome will occur; and 40 times out of 100, the unfavored outcome will occur.

Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism.

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Any comment, Michael Giberson?

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Credits given to:

- Chris Masse;.

- Robin Hanson.

- Jonathan Kennedy.