Prediction Markets for Economic Forecasting

Erik Snowberg, Justin Wolfers and Eric Zitzewitz

No 18222, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Prediction markets--markets used to forecast future events--have been used to accurately forecast the outcome of political contests, sporting events, and, occasionally, economic outcomes. This chapter summarizes the latest research on prediction markets in order to further their utilization by economic forecasters. We show that prediction markets have a number of attractive features: they quickly incorporate new information, are largely efficient, and impervious to manipulation. Moreover, markets generally exhibit lower statistical errors than professional forecasters and polls. Finally, we show how markets can be used to both uncover the economic model behind forecasts, as well as test existing economic models.

JEL-codes: C53 G14 (search for similar items in EconPapers)
Date: 2012-07
New Economics Papers: this item is included in nep-for
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Citations: View citations in EconPapers (15)

Published as Prediction Markets for Economic Forecasting Handbook of Economic Forecasting, Volume 2, Graham Elliott and Allan Timmermann (eds.), Elsevier (2013). With Justin Wolfers and Eric Zitzewitz.

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Related works:
Chapter: Prediction Markets for Economic Forecasting (2013)
Working Paper: Prediction Markets for Economic Forecasting (2012)
Working Paper: Prediction Markets for Economic Forecasting (2012)
Working Paper: Prediction Markets for Economic Forecasting (2012)
Working Paper: Prediction Markets for Economic Forecasting (2012)
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