Prediction markets
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This document discusses prediction markets and some of their challenges. Prediction markets allow people to bet on outcomes, like who will win a startup competition, by buying and trading "stocks" tied to each possible outcome. The price of the stocks is meant to reflect the probability of each outcome. However, prediction markets face issues with attracting enough users and making the stock market-based system intuitive for most people. The document explores how to address these usability and adoption problems, such as building the system on popular platforms like Facebook or monetizing the information gained from a prediction market.
Prediction markets
- 1. Domas Monkus domas@nous.lt Nous www.nous.lt PREDICTION MARKETS INTRO AND PROBLEMS D
- 2. Who are the winners of Democamp? Polls Expert opinions Statistical models Bets
- 3. Who are the winners of Democamp? - Who, do you think, will win? - My team, of course! Opinions are biased. So are the polls.
- 4. Prediction markets Iowa Electronic Markets - 1988 Wisdom of the crowds (J.Surowiecki, 2004)
- 5. Prediction markets Stocks are tied to events Stock payouts depend on the outcomes Stock prices correlate with the probabilities
- 6. Prediction markets: an example Democamp: 11 startups 11 possible winners 11 stocks in the Democamp market The winning team's stock will produce a payout (profit)
- 7. Prediction markets The benefit? Accuracy! Iowa Electronic Markets: 2008 US President election Democrats Republicans
- 8. Prediction markets Why? Wisdom of the crowds (J.Surowiecki) Incentives for information discovery and truthful revelation of beliefs Efficient market hypothesis
- 9. Prediction markets who's in? ...
- 10. Prediction markets who's using them? Demokratai Respublikonai
- 11. What's the problem? Demokratai Respublikonai Users Usability
- 12. Why facebook? A channel for: User acquisition User activation User retention User referrals High trading volumes and thus a large user base is necessary for forecasting accuracy.
- 13. Usability Financial and stock market terms are difficult for most people. Yet they are the essence of prediction markets. So how much of the market can you hide before you start to lose the prediction?
- 14. The future Sell the service (SaaS) Sell the information In-game-purchases
- 15. Thank you