Prediction Markets

Wolfers, Justin; Zitzewitz, Eric

doi:10.1257/0895330041371321

Cited by 800 publications

(353 citation statements)

References 17 publications

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“…More recently a prediction market study on replications in psychology has yielded promising results (26), in the sense that predictions revealed by market prices are correlated with actual replication outcomes (and are more strongly correlated than surveyed beliefs). Prediction markets have also been successfully used in several other fields such as sports, entertainment, and politics (25,(59)(60)(61)(62).…”

Section: Estimation Of Standardized Effect Sizes and Meta-analysismentioning

confidence: 99%

Evaluating replicability of laboratory experiments in economics

Camerer

Dreber

Forsell

et al. 2016

Science

1,053

856

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Another social science looks at itself Experimental economists have joined the reproducibility discussion by replicating selected published experiments from two top-tier journals in economics. Camerer et al. found that two-thirds of the 18 studies examined yielded replicable estimates of effect size and direction. This proportion is somewhat lower than unaffiliated experts were willing to bet in an associated prediction market, but roughly in line with expectations from sample sizes and P values. Science , this issue p. 1433

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Section: Estimation Of Standardized Effect Sizes and Meta-analysismentioning

confidence: 99%

Evaluating replicability of laboratory experiments in economics

Camerer

Dreber

Forsell

et al. 2016

Science

1,053

856

View full text Add to dashboard Cite

show abstract

“…In experimental game theory, it is common to study individuals' behavior when tiny sums are at stake. Prediction markets are a good example of cases in which the stakes are small, but there is strong evidence that prices are nonetheless quite informative (Wolfers and Zitzewitz (2004)). The dollar trading volumes in inflation derivatives are minuscule relative to the Treasury market, but still big enough to presumably reflect the beliefs of traders in this market, and far bigger than those in experimental games and in prediction markets.…”

Section: Inflation Caps and Floorsmentioning

confidence: 99%

The economics of options-implied inflation probability density functions

Kitsul

Wright

2013

Journal of Financial Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract Recently a market in options based on CPI in ‡ation (in ‡ation caps and ‡oors) has emerged in the US. This paper uses quotes on these derivatives to construct probability densities for in ‡ation. We study how these pdfs respond to news announcements, and …nd that the implied odds of de ‡ation are sensitive to certain macroeconomic news releases. We compare the option-implied probability densities with those obtained by time series methods, and use this information to construct empirical pricing kernels. The options-implied densities assign considerably more mass to extreme in ‡ation outcomes (either de ‡ation or high in ‡ation) than do their time series counterparts. This yields a U-shaped empirical pricing kernel, with investors having high marginal utility in states of the world characterized by either de ‡ation or high in ‡ation. Terms of use: Documents in EconStor mayJEL Classi…cation: C22, E31, E44, G12.

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“…Tacit coordination appears to be one of a growing list of tasks that can be effectively tackled by harnessing the wisdom of crowds (Surowiecki, 2004). In many quantitative forecasting tasks, pooling and averaging the judgments of even just a few individuals can lead to more accurate predictions than are made by individuals (Clemen, 1989;Wolfers & Zitzewitz, 2004). This effect rests on the fact that individual forecasters differ in terms of their error, and that the error can be "canceled out" by averaging their responses (Larrick & Soll, 2006).…”

Section: Discussionmentioning

confidence: 99%

Groups Outperform Individuals in Tacit Coordination by Using Consensual and Disjunctive Salience

Chartier¹

2017

Preprint

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Tacit coordination between individuals has received considerable research attention (Mehta, Starmer & Sugden, 1994; Abele, & Stasser, 2008). However, groups often must coordinate tacitly with other groups, and such intergroup coordination has been rarely studied. In three experiments, we found that interacting groups are more successful at coordinating tacitly than are individuals. This advantage is driven by two types of coordination salience that are uniquely derived from groups deliberating and making collective responses. Consensual salience occurs when groups select a response because a majority of members support it. Majorities efficiently identify popular response tendencies (i.e., focal points) and thereby increase the chances of matching other groups’ responses. Disjunctive salience occurs when at least one member of a group suggests a focal point. We propose that focal points are often demonstratively evident when mentioned, and if proposed by any group member, are likely to be adopted as the group response.

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Prediction Markets

Cited by 800 publications

References 17 publications

Evaluating replicability of laboratory experiments in economics

Evaluating replicability of laboratory experiments in economics

The economics of options-implied inflation probability density functions

Groups Outperform Individuals in Tacit Coordination by Using Consensual and Disjunctive Salience

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