Five Open Questions About Prediction Markets

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Five Open Questions About Prediction Markets

Author Info

Justin Wolfers () (Wharton, University of Pennsylvania, CEPR, NBER and IZA Bonn)
Eric Zitzewitz () (Stanford GSB)

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Abstract

Interest in prediction markets has increased in the last decade, driven in part by the hope that these markets will prove to be valuable tools in forecasting, decision-making and risk management - in both the public and private sectors. This paper outlines five open questions in the literature, and we argue that resolving these questions is crucial to determining whether current optimism about prediction markets will be realized.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1975.

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Length: 27 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:iza:izadps:dp1975

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Paper
- Justin Wolfers & Eric Zitzewitz, 2006. "Five open questions about prediction markets," Working Paper Series 2006-06, Federal Reserve Bank of San Francisco. [Downloadable!]
- Justin Wolfers & Eric Zitzewitz, 2006. "Five Open Questions About Prediction Markets," NBER Working Papers 12060, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Wolfers, Justin & Zitzewitz, Eric, 2006. "Five Open Questions About Prediction Markets," CEPR Discussion Papers 5562, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)

Find related papers by JEL classification:
C9 - Mathematical and Quantitative Methods - - Design of Experiments
D7 - Microeconomics - - Analysis of Collective Decision-Making
D8 - Microeconomics - - Information, Knowledge, and Uncertainty
G1 - Financial Economics - - General Financial Markets
M2 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-02-19 (All new papers)
NEP-FIN-2006-02-19 (Finance)
NEP-FMK-2006-02-19 (Financial Markets)
NEP-RMG-2006-02-19 (Risk Management)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Andrew Leigh & Justin Wolfers & Eric Zitzewitz, 2003. "What Do Financial Markets Think of War in Iraq?," NBER Working Papers 9587, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Leigh, Andrew & Wolfers, Justin & Zitzewitz, Eric, 2003. "What do Financial Markets Think of War in Iraq?," Research Papers 1785, Stanford University, Graduate School of Business. [Downloadable!]
Thaler, Richard H & Ziemba, William T, 1988. "Parimutuel Betting Markets: Racetracks and Lotteries," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 161-74, Spring. [Downloadable!] (restricted)
Shleifer, Andrei & Vishny, Robert W, 1997. " The Limits of Arbitrage," Journal of Finance, American Finance Association, vol. 52(1), pages 35-55, March. [Downloadable!] (restricted)
Other versions:
- Andrei Shleifer ad Robert W. Vishny, 1995. "The Limits of Arbitrage," Harvard Institute of Economic Research Working Papers 1725, Harvard - Institute of Economic Research.
- Andrei Shleifer & Robert W. Vishny, 1995. "The Limits of Arbitrage," NBER Working Papers 5167, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Slemrod, Joel & Greimel, Timothy, 1999. "Did Steve Forbes scare the US municipal bond market?," Journal of Public Economics, Elsevier, vol. 74(1), pages 81-96, October. [Downloadable!] (restricted)
Justin Wolfers & Eric Zitzewitz, 2004. "Prediction Markets," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 107-126, Spring. [Downloadable!] (restricted)
Other versions:
- Justin Wolfers & Eric Zitzewitz, 2004. "Prediction Markets," NBER Working Papers 10504, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Wolfers, Justin & Zitzewitz, Eric, 2004. "Prediction Markets," Research Papers 1854, Stanford University, Graduate School of Business. [Downloadable!]
Milgrom, Paul & Stokey, Nancy, 1982. "Information, trade and common knowledge," Journal of Economic Theory, Elsevier, vol. 26(1), pages 17-27, February. [Downloadable!] (restricted)
Other versions:
- Paul Milgrom & Nancy L.Stokey, 1979. "Information, Trade, and Common Knowledge," Discussion Papers 377R, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
Justin Wolfers & Eric Zitzewitz, 2004. "Experimental Political Betting Markets and the 2004 Election," The Economists' Voice, Berkeley Electronic Press, vol. 1(2). [Downloadable!]
Kyle, Albert S, 1985. "Continuous Auctions and Insider Trading," Econometrica, Econometric Society, vol. 53(6), pages 1315-35, November. [Downloadable!] (restricted)
Erik Snowberg & Justin Wolfers & Eric Zitzewitz, 2006. "Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections," IZA Discussion Papers 1996, Institute for the Study of Labor (IZA). [Downloadable!]
Other versions:
- Snowberg, Erik & Wolfers, Justin & Zitzewitz, Eric, 2006. "Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections," Research Papers 1928, Stanford University, Graduate School of Business. [Downloadable!]
- Erik Snowberg & Justin Wolfers & Eric Zitzewitz, 2006. "Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections," NBER Working Papers 12073, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Erik Snowberg & Justin Wolfers & Eric Zitzewitz, 2006. "Partisan impacts on the economy: evidence from prediction markets and close elections," Working Paper Series 2006-08, Federal Reserve Bank of San Francisco. [Downloadable!]
- Snowberg, Erik & Wolfers, Justin & Zitzewitz, Eric, 2006. "Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections," CEPR Discussion Papers 5591, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Erik Snowberg & Justin Wolfers & Eric Zitzewitz, 2007. "Partisan Impacts on the Economy: Evidence From Prediction Markets and Close Elections," The Quarterly Journal of Economics, MIT Press, vol. 122(2), pages 807-829, 05. [Downloadable!] (restricted)
Justin Wolfers & Eric Zitzewitz, 2006. "Interpreting Prediction Market Prices as Probabilities," NBER Working Papers 12200, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Wolfers, Justin & Zitzewitz, Eric, 2006. "Interpreting Prediction Market Prices as Probabilities," CEPR Discussion Papers 5676, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Justin Wolfers & Eric Zitzewitz, 2006. "Interpreting prediction market prices as probabilities," Working Paper Series 2006-11, Federal Reserve Bank of San Francisco. [Downloadable!]
- Justin Wolfers & Eric Zitzewitz, 2006. "Interpreting Prediction Market Prices as Probabilities," IZA Discussion Papers 2092, Institute for the Study of Labor (IZA). [Downloadable!]

Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Wolfers, Justin & Zitzewitz, Eric, 2006. "Prediction Markets in Theory and Practice," CEPR Discussion Papers 5578, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
Other versions:
- Wolfers, Justin & Zitzewitz, Eric, 2006. "Prediction Markets in Theory and Practice," Research Papers 1927, Stanford University, Graduate School of Business. [Downloadable!]
- Justin Wolfers & Eric Zitzewitz, 2006. "Prediction Markets in Theory and Practice," NBER Working Papers 12083, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Justin Wolfers & Eric Zitzewitz, 2006. "Prediction Markets in Theory and Practice," IZA Discussion Papers 1991, Institute for the Study of Labor (IZA). [Downloadable!]
Gikas Hardouvelis & Dimitrios Thomakos, 2007. "Consumer Confidence and Elections," Working Papers 0003, University of Peloponnese, Department of Economics. [Downloadable!]
Other versions:
- Dimitrios D. Thomakos & Gikas A. Hardouvelis, 2007. "Consumer Confidence and Elections," Working Paper Series 42-07, Rimini Centre for Economic Analysis, revised Jul 2007. [Downloadable!]
- Hardouvelis, Gikas A & Thomakos, Dimitrios D, 2008. "Consumer Confidence and Elections," CEPR Discussion Papers 6701, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)

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