Methods to Elicit Forecasts from Groups: Delphi and Prediction Markets Compared

Kesten Green, J. Armstrong and Andreas Graefe ()

MPRA Paper from University Library of Munich, Germany

Abstract: Traditional groups meetings are an inefficient and ineffective method for making forecasts and decisions. We compare two structured alternatives to traditional meetings: the Delphi technique and prediction markets. Delphi is relatively simple and cheap to implement and has been adopted for diverse applications in business and government since its origins in the 1950s. It can be used for nearly any forecasting, estimation, or decision making problem not barred by complexity or ignorance. While prediction markets were used more than a century ago, their popularity waned until more recent times. As a consequence there is less evidence on their validity. Prediction markets need many participants. They need clear outcomes in order to determine participants’ pay-offs. Even so, relating their knowledge to market prices is not intuitive to everyone and constructing contracts that will provide a useful forecast may not be possible for some problems. It is difficult to maintain confidentiality with markets and they are vulnerable to manipulation. Delphi is designed to reveal panelists’ knowledge and opinions via their forecasts and the reasoning they provide. This format allows testing of knowledge and learning by panelists as they refine their forecasts. Such a process does not happen explicitly in prediction markets and may not happen at all. The reasoning provided as an output of the Delphi process is likely to be reassuring to forecast users who are uncomfortable with the “black box” nature of prediction markets. We consider that, half a century after its original development, Delphi is greatly under-utilized.

Keywords: accuracy; forecasting methods; groups; judgment; meetings; structure (search for similar items in EconPapers)
JEL-codes: C42 C44 C49 C88 D81 D82 D83 D84 (search for similar items in EconPapers)
Date: 2007-08-31
New Economics Papers: this item is included in nep-cbe and nep-for
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/4663/1/MPRA_paper_4663.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/4999/1/MPRA_paper_4999.pdf revised version (application/pdf)

Related works:
Journal Article: Methods to Elicit Forecasts from Groups: Delphi and Prediction Markets Compared (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:4663

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().