Tag Archives: velocity
Prediction markets failed miserably at forecasting accurately the American Idol winner.
Aggregating information was not enough to predict the future —this time. Our prediction exchanges won’t issue any statement about it: They will keep it under the rug. When their prediction markets succeed, they brag about it in the media. But when prediction markets fail miserably, it is a deafening silence out there. The “wisdom of [...]
Vertical Media vs. Prediction Markets vs. Mass Media
Let’s rank institutions according to who has dealt first with the swine flu:
Vertical media and local media — starting Tuesday, April 21, 2009
Mass media, news aggregators, and user-created prediction markets (a la HubDub) — starting Friday, April 24, 2009
Centrally managed prediction markets (a la InTrade) — starting Monday, April 27, 2009
External Link: Google News Timeline
Previously: [...]
The truth about (enterprise) prediction markets
Paul Hewitt:
[...] In virtually every case, the prediction market forecast is closer to the official HP forecast than it is to the actual outcome. Perhaps these markets are better at forecasting the forecast than they are at forecasting the outcome! Looking further into the results, while most of the predictions have a smaller error than [...]
“It is their velocity that we should put to work.”
Remember what the great Chris Masse said?
Nate Silver applies the approach to Bobby Jindal.
Note that accuracy is out of the picture (since 2012 is far away) —as I said, the velocity argument is impermeable to inaccuracy and backfires.
Sean Park, take this as my answer.
Is Panos’s goal the same as the people’s goal?
Celebrating such “successes” leads to backfire when the markets end up *not* being correct.
That is true, Panos, but there is absolutely nothing you can do to prevent the non-academic prediction exchanges to brag about “successes” —“we nailed all 50 states”.
Note that, by contrast, the efficiency (velocity) argument does not lead to any backfire —because it is impermeable to inaccuracy.
Accuracy and Efficiency of Prediction Markets
To sum up things…
And in other words:
The relative accuracy of the prediction markets = epsilon and (quite) controversial.
The relative efficiency of the prediction markets versus the mass media (not the vertical media) = big (in complicated situations), undeniable, and impermeable to inaccuracy.
Voila.
Part of the job of the Open Institute Of Prediction Markets will be to [...]
Plus…
… the velocity argument will lead to new applications.
Velocity + Inaccuracy
One bit of criticism about my pamphlet (The Truth About Prediction Markets) goes like this: Velocity without accuracy is dumb.
That is not true.
Let’s imagine, for the sake of the exercise, that Barack Obama does not pick up Kathleen Sebelius to head HHS. The velocity argument remains valid: Fed by the vertical media (in this case, [...]
Prediction markets didn’t “revolutionize” decision-making —and will never do. However, they are a nice condiment to the classic forecasting toolkit.
I have spent several hours re-reading the 2004 AEI-Brookings book, “Information Markets” (by which they mean “prediction markets”). It is a collection of un-enlightening research articles —except for the IEM article, which is outstanding, both on the factual and theoretical sides.
In the conclusion of their introduction, Robert Hahn and Paul Tetlock wrote that they want [...]
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