Aggregating private information from individuals, prediction markets are a judgmental forecasting method.

Participants reveal private information by trading contracts whose pay-off is tied to the outcomes of future events. The market automatically aggregates the dispersed bits of information and produces dynamic forecasts.

For example, a contract on the outcome of an election pays $100 only if candidate X wins the election, and $0 otherwise. Assuming a current price of this contract of $45, the market forecasts a probability of 45% that candidate X will win the election.

Being part of Forecasting Principles, this SIG aims at presenting research findings that support evidence-based principles. In particular, the site covers ongoing research that provides guidelines, prescriptions, rules, conditions, action statements, or advice about what to do in given situations.

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The material for this special interest group is organized and submitted by Andreas Graefe – Please contact him for further information, and corrections, additions, or suggestions for these pages.