Five Open Questions About Prediction Markets
27 Pages Posted: 26 Jun 2006
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Five Open Questions About Prediction Markets
Five Open Questions About Prediction Markets
Date Written: March 2006
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.
Keywords: Prediction markets, information markets, event futures, prediction IV, instrumental variables, market manipulation
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