Posted by: Paul Hewitt | March 9, 2009

My Current Issues List

Here is a list of prediction market issues that I am currently researching:

  1. How many traders are required to reach a reasonably accurate prediction?
  2. How much research/information search, on the part of traders, is sufficient?  Desirable?
  3. How much information may be supplied to traders, without introducing a bias that would degrade the accuracy of predictions?
  4. How does the price algorithm affect trading behaviour?  View my initial comments
  5. What is the best way to allow short selling?  Is it necessary?
  6. What is the best way to formulate questions to be predicted?
  7. How long does it take for a prediction market to reach an equilibrium?  How do we know?  What does it depend upon?
  8. How do you minimize herding, cascading and trader dependence?
  9. How do you minimize trader guessing (as opposed to informed trading)?
  10. What role does a trader’s risk profile play in arriving at the outcome prediction?
  11. Is it important that the collective trading risk profile match that of the real decisionmaker?
  12. What is the best way to measure uncertainty in two outcome markets?  Comments on Entropy Idea
  13. Which types of questions are least well suited for prediction markets?
  14. Why aren’t more corporations looking to prediction markets to measure uncertainty of their predictions of future events, conditions and actions?

Over the next few weeks, months(!), (depending on how busy I am), I hope to resolve many of these issues.  After that, golf season is here and the answers may have to wait until the Fall!

Any help getting me to the course sooner will be much appreciated!

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