prediction market
Betting on outcomes
A prediction market is a speculative market where participants buy and sell contracts based on the outcome of future events—elections, economic indicators, sports results.
Prices reflect the crowd's collective estimate of probability: if shares of "Candidate X wins" trade at 65 cents, the market implies a 65% chance.
The prediction markets had the election closer than the polls did.
Groups outpredict individuals
- order bookRecord of pending trades
- bidOffer to purchase
- askSeek an answer
- spreadTo distribute widely
liquidity · trading volume · peer-to-peer · decentralized · oracle · payout structure
Exploiting price discrepancies
- price signalsCost changes conveying information
- skin in the gamePersonal risk in outcome
- behavioral economicsPsychology of financial decisions
Staking money on outcomes
- oddsLikelihood expressed numerically
- stakesPosts or wagers
- payoutMoney distributed to recipient
- positionLocation or stance
long · short · hedge · speculation · risk tolerance · bankroll · exposure · profit
Adjusting for measurement accuracy
- accuracyDegree of correctness
- track recordHistory of performance
- trend analysisExamining directional data shifts
- base ratesFoundational interest percentages
Formal choosing of officials
- economic indicatorsData measuring financial health
- scientific discoveriesFacts revealed through systematic study
- product launchesIntroducing new goods commercially
- corporate earningsCompany income after expenses
Mutual giving and receiving
- user interfaceHuman-computer interaction system
- APISoftware communication standard
- leaderboardRanked list of competitors
wisdom of crowds
Groups outpredict individuals
- order bookRecord of pending trades
- bidOffer to purchase
- askSeek an answer
spread · liquidity · trading volume · peer-to-peer · decentralized · oracle · payout structure
arbitrage
Exploiting price discrepancies
- price signalsCost changes conveying information
- skin in the gamePersonal risk in outcome
- behavioral economicsPsychology of financial decisions
betting
Staking money on outcomes
position · long · short · hedge · speculation · risk tolerance · bankroll · exposure · profit · loss
calibration
Adjusting for measurement accuracy
- accuracyDegree of correctness
- track recordHistory of performance
- trend analysisExamining directional data shifts
elections
Formal choosing of officials
- economic indicatorsData measuring financial health
- scientific discoveriesFacts revealed through systematic study
- product launchesIntroducing new goods commercially
exchange
Mutual giving and receiving
- user interfaceHuman-computer interaction system
- APISoftware communication standard
- leaderboardRanked list of competitors
prediction marketopinion poll
Sampling of group views
gut instinct · intuition · coin flip · survey · expert panel
prediction marketofficial narrative
party line · received wisdom · dogma · oracle · prophecy
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