March 5th, 2008 - Session 2
Predicting the future with prediction markets
The idea for prediction markets came from dealing with stock markets. The first experiment was on political stock markets where you could trade candidates (late 80s) by the University of Iowa.
Companies like HP wondered whether they could use those forecasts.
In 1988, HP started an experiment with their sales people to see whether they could predict sales for their printers. They created stocks that represented how many printers would be sold. Predictions from the market were better than the official forecasts from the company. That created huge interest for the prediction model.
Most of the applications are used for predicting sales and prices.
The Predicting model
Maximum value stock is traded at is 99.
When price is at extremes, there seems to be a lot of volume in the market.
We registered with an own account and are currently trading on this prediction market. After a rather bad start with a loss of several hundred dollars, I finally made quite a profit. Today I had some cash left and invested on a few markets. It is impressive to see how this model functions.
More information can be found at:
http://us.newsfutures.com/home/home.html
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment