History
One of the oldest and most famous is the University of Iowa's Iowa Electronic Markets, introduced during the 1988 U.S. presidential election. The Hollywood Stock Exchange, a virtual market game established in 1996 and now a division of Cantor Fitzgerald, LP, in which players buy and sell prediction shares of movies, actors, directors, and film-related options, correctly predicted 32 of 2006's 39 big-category Oscar nominees and 7 out of 8 top category winners. HedgeStreet, designated in 1991 as a market and regulated by the Commodity Futures Trading Commission, enables Internet traders to speculate on economic events.
Prediction markets have a long and colorful lineage. Betting on elections was common in the U.S. until at least the 1940s, with formal markets existing on Wall Street in the months leading up to the race. Newspapers reported market conditions to give a sense of the closeness of the contest in this period prior to widespread polling. The markets involved thousands of participants, had millions of dollars in volume in current terms, and had remarkable predictive accuracy.
Around 1990 at Project Xanadu, Robin Hanson used the first known corporate prediction market. Employees used it in order to bet on, for example, the cold fusion controversy.
In July 2003, the U.S. Department of Defense publicized a Policy Analysis Market and on their website speculated that additional topics for markets might include terrorist attacks. A critical backlash quickly denounced the program as a "terrorism futures market" and the Pentagon hastily canceled the program.
Prediction markets are championed in James Surowiecki's 2004 book The Wisdom of Crowds, Cass Sunstein's 2006 Infotopia, and How to Measure Anything: Finding the Value of Intangibles in Business by Douglas Hubbard.
The research literature is collected together in the peer reviewed The Journal of Prediction Markets, edited by Leighton Vaughan Williams and published by the University of Buckingham Press. The journal was first published in 2007, and is available online and in print.
In John Brunner's 1975 science fiction story The Shockwave Rider there is a description of a prediction market that he called the Delphi Pool.
In October 2007 companies from the United States, Ireland, Austria, Germany, and Denmark formed the Prediction Market Industry Association, tasked with promoting awareness, education, and validation for prediction markets.
Read more about this topic: Prediction Market
Famous quotes containing the word history:
“Jesus Christ belonged to the true race of the prophets. He saw with an open eye the mystery of the soul. Drawn by its severe harmony, ravished with its beauty, he lived in it, and had his being there. Alone in all history he estimated the greatness of man.”
—Ralph Waldo Emerson (1803–1882)
“Most events recorded in history are more remarkable than important, like eclipses of the sun and moon, by which all are attracted, but whose effects no one takes the trouble to calculate.”
—Henry David Thoreau (1817–1862)
“The custard is setting; meanwhile
I not only have my own history to worry about
But am forced to fret over insufficient details related to large
Unfinished concepts that can never bring themselves to the point
Of being, with or without my help, if any were forthcoming.”
—John Ashbery (b. 1927)