Prediction Markets

Extracted Attributes

• Types

  Continuous Double Auction, Automated Market Makers & Market Scoring Rules, Real Money vs. Play Money, Other Crowdsourced Forecasting Methods

• Mechanism

  Exchange-traded markets, trading contracts (0-100% probability), binary options

• Also known as

  Betting markets, Information markets, Decision markets, Idea futures, Event derivatives

• Core Function

  Predict specific outcomes, aggregate collective beliefs, elicit information on unknown future events

• Characteristics

  Crowdsourcing, harness collective intelligence, prices reflect real-time sentiment, often outperform expert opinions/traditional polls

• Public Examples

  PredictIt, Polymarket

• Applications/Use Cases

  Presidential elections, sporting events, product launch timelines, sales data, commodity prices, company revenue, exchange rates, concept testing

• Corporate Users (Internal)

  Google, Microsoft (for forecasting product launch timelines and sales data)

Prediction market

Prediction markets, also known as betting markets, information markets, decision markets, idea futures or event derivatives, are open markets that enable the prediction of specific outcomes using financial incentives. They are exchange-traded markets established for trading bets in the outcome of various events. The market prices can indicate what the crowd thinks the probability of the event is. A typical prediction market contract is set up to trade between 0 and 100%. The most common form of a prediction market is a binary option market, which will expire at the price of 0 or 100%. Prediction markets can be thought of as belonging to the more general concept of crowdsourcing which is specially designed to aggregate information on particular topics of interest. The main purposes of prediction markets are eliciting aggregating beliefs over an unknown future outcome. Traders with different beliefs trade on contracts whose payoffs are related to the unknown future outcome and the market prices of the contracts are considered as the aggregated belief.

Web Search Results

• Prediction Market: Overview, Types, Examples

  Prediction markets are markets where contracts that are contingent on the occurrence of events in the future can be traded. These contracts are similar to bets on uncertain events, and prediction markets are also known as betting markets. They are used to bet on a variety of instances and circumstances, from the outcome of presidential elections to the results of a sporting event. [...] A prediction market is a market where people can trade contracts that pay based on the outcomes of unknown future events. The market prices generated from these contracts can be understood as a kind of collective prediction among market participants. These prices are based on the individual expectations and willingness of investors to put their money on the line for those expectations. [...] Prediction markets are similar to futures markets for commodities or other financial asset prices. In futures markets, traders bid up or down the price of a future contract based on their expectation of what the future price of the underlying asset will be. Prediction markets are just futures markets where the future event being traded upon is something other than the price of an asset at some point in the future. Prediction markets involve a collection of people speculating on a variety of

• What is A Prediction Market | Ledger

  Prediction markets are powerful platforms where people bet on future events, turning financial incentives into sharp forecasts. They harness the collective intelligence of diverse participants, often outpacing expert opinions or traditional polls when the crowd brings varied insights. Prices shift swiftly as new information—breaking news, economic data, or sentiment changes—hits, with traders racing to profit by keeping odds current. [...] In sports, prediction markets offer a peer-to-peer alternative to traditional sportsbooks. Instead of odds being set by a bookmaker, users trade directly with each other, similar to betting exchanges like Betfair. Every outcome becomes a market, where prices reflect real-time sentiment based on injuries, performance trends, or breaking news. If a “yes” share for a team winning costs $0.60, the implied probability is 60%—and that price moves with market demand. [...] | — Prediction markets leverage collective wisdom and real-time data for accurate forecasting, often outperforming traditional methods. — Web2 businesses use prediction markets for internal forecasting and decision-making, with companies like Google and Microsoft using them to predict product launch timelines and sales data more effectively than surveys. — But, Blockchain-based prediction markets provide transparency and decentralization, utilizing smart contracts on platforms like Polymarket

• Prediction Markets for Concept Testing

  > Prediction markets are speculative markets created for the purpose of making predictions. Assets are created whose final cash value is tied to a particular event or parameter. The current market prices can then be interpreted as predictions of the probability of the event or the expected value of the parameter. (2) [...] A well-known example of a prediction market is the New York Stock Exchange (NYSE), where investors trade equity shares in public corporations. The share price of a corporation may be interpreted as a predicted value of their future earnings – an extremely accurate prediction in fact. [...] This white paper describes prediction markets, an innovative way to improve the speed and accuracy of online concept tests. You will learn why prediction markets deliver accurate concept tests more quickly than traditional methods, how prediction markets work, why they are more cost effective, and when you should utilize a prediction market. What if there were a better way to do concept tests?

• Prediction Market - Overview, How It Works, Types

  A prediction market or betting market is an exchange-traded market where individuals can bet on the outcome of a variety of events with an unknown future. There are four types of prediction markets: Continuous Double Auction, Automated Market Makers & Market Scoring Rules, Real Money vs. Play Money, Other Crowdsourced Forecasting Methods. A well-known public prediction market is Predictlt. ### Understanding Prediction Markets [...] A prediction market or betting market is an exchange-traded market where individuals can bet on the outcome of a variety of events with an unknown future. The events range from future commodity prices, yearly revenue results of a company, exchange rates, etc. A well-known public prediction market, Predictlt, predicts the events in the financial and political markets. ### Summary [...] Home › Resources › Career Map › Sell-Side Banks › Capital Markets › Prediction Market Table of Contents What is a Prediction Market? + Understanding Prediction Markets + Types of Prediction Market + Additional Resources # Prediction Market An exchange-traded market where individuals can bet on the outcome of a variety of events with an unknown future Written by CFI Team Read Time 3 minutes

• A Primer on Prediction Markets

  The ability to effectively hedge against specific risks creates market liquidity. Prediction markets are a little bit more nuanced than derivatives markets since they can cover solely event-based outcomes instead of price-based action in traditional derivatives exchanges. This opens up a realm of opportunity for traders both individual and institutional depending on the investments they pursue. This encourages a new market of potential hedges.