Prediction Markets

Free Write

1. Briefly describe the prediction market.

Prediction markets can be used as a tool to make money as we discussed in class. The goal a prediction market is to survey the highest number of people possible in order to:
-Increase the accuracy of the prediction.
-Increases the accuracy of the question.
The more individuals that are surveyed and the wider the survey is, the more accurate the prediction becomes. This is based my answers to the following questions.

2. The pros of cons of using prediction market compared to the traditional group meeting.

Cons
-In a crisis situation it is important to have a smaller group of individuals who are on the same page. This gives the capability of making a decision quickly.
-The group of individuals that you survey may not have knowledge or real opinions about the topic they are being surveyed about.

Pros
-Groups tend to think alike and have biased opinions, while large surveys do not.
-Prediction markets have an increased diversity of opinion.
-Independence from others surveyed and is not influenced by other individuals in the group.
-When you look at a large numbers and people, extremes o both ends are avoided and the aggregate becomes a better well rounded opinion overall.

3. How does the prediction refelect the wisdom of the crowds?

The prediction reflects the wisdom of the crowds for all of the reasons I mentioned in the following question.
-You gain diversity of opinion
-Independence of opinion
-Unbiased opinion
All of the above mentioned increase the accuracy of the result. A fairly large group must be surveyed because a the smaller the group you are more likely to have a higher number of people who are not familiar with the survey topic.