Featured Research

from universities, journals, and other organizations

Prediction Markets Strong At Forecasting US Presidential Elections, Says New Management Insights

Date:
August 18, 2008
Source:
Institute for Operations Research and the Management Sciences
Summary:
A case study of the 2004 US Presidential election by researchers at Yale shows that prediction markets are proving to be a strong forecasting tool, one that may have an impact in calling the current presidential contest between Democrat Senator Barack Obama and Republican Senator John McCain, according to the Management Insights feature in the current issue of Management Science.

A case study of the 2004 U.S. Presidential election by researchers at Yale shows that prediction markets are proving to be a strong forecasting tool, one that may have an impact in calling the current presidential contest between Democrat Senator Barack Obama and Republican Senator John McCain, according to the Management Insights feature in the current issue of Management Science, the flagship journal of the Institute for Operations Research and the Management Sciences (INFORMS®).

Related Articles


"Modeling a Presidential Prediction Market" is by M. Keith Chen, Jonathan E. Ingersoll, Jr., and Edward H. Kaplan of the Yale School of Management.

In their study, the authors relate that many firms are establishing internal prediction markets, while public prediction markets increasingly cover all manner of business, economic, and political events. Managers must decide whether to treat these markets seriously, especially when they price complex, interdependent events.

The authors' case study of the 2004 presidential election market suggests that they should. They explore the consistency of security prices associated with presidential election contracts that traded in the Intrade.com prediction market during the run up to the 2004 presidential election. In that prediction market, traders placed bets on various election outcomes such as "George Bush will win both Florida and Ohio" and "George Bush will be elected President of the United States."

The authors find that these prices were mutually consistent with the rules governing the Electoral College, and that traders appeared to quickly and efficiently assimilate new information as it unfolded over the campaign.

Turning to business, the authors suggest that prediction markets can be a valuable tool for managers who face decisions that may depend on the outcome of complex and interdependent events. Established prediction markets will likely do a good job assessing events in which interest is widespread. For events of narrower interest, establishing an internal prediction market may be an effective way to aggregate information within the firm.


Story Source:

The above story is based on materials provided by Institute for Operations Research and the Management Sciences. Note: Materials may be edited for content and length.


Journal Reference:

  1. Chen et al. Modeling a Presidential Prediction Market. Management Science, 2008; 54 (8): 1381 DOI: 10.1287/mnsc.1080.0872

Cite This Page:

Institute for Operations Research and the Management Sciences. "Prediction Markets Strong At Forecasting US Presidential Elections, Says New Management Insights." ScienceDaily. ScienceDaily, 18 August 2008. <www.sciencedaily.com/releases/2008/08/080815130423.htm>.
Institute for Operations Research and the Management Sciences. (2008, August 18). Prediction Markets Strong At Forecasting US Presidential Elections, Says New Management Insights. ScienceDaily. Retrieved March 27, 2015 from www.sciencedaily.com/releases/2008/08/080815130423.htm
Institute for Operations Research and the Management Sciences. "Prediction Markets Strong At Forecasting US Presidential Elections, Says New Management Insights." ScienceDaily. www.sciencedaily.com/releases/2008/08/080815130423.htm (accessed March 27, 2015).

Share This


More From ScienceDaily



More Science & Society News

Friday, March 27, 2015

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Why So Many People Think NASA's Asteroid Mission Is A Waste

Why So Many People Think NASA's Asteroid Mission Is A Waste

Newsy (Mar. 27, 2015) — The Asteroid Retrieval Mission announced this week bears little resemblance to its grand beginnings. Even NASA scientists are asking, "Why bother?" Video provided by Newsy
Powered by NewsLook.com
Indiana Permits Needle Exchange as HIV Cases Skyrocket

Indiana Permits Needle Exchange as HIV Cases Skyrocket

Reuters - US Online Video (Mar. 26, 2015) — Governor Mike Pence declares the recent HIV outbreak in rural Indiana a "public health emergency" and authorizes a short-term needle-exchange program. Rough Cut (no reporter narration) Video provided by Reuters
Powered by NewsLook.com
AAA: Distracted Driving a Serious Teen Problem

AAA: Distracted Driving a Serious Teen Problem

AP (Mar. 25, 2015) — While distracted driving is not a new problem for teens, new research from the AAA Foundation for Traffic Safety says it&apos;s much more serious than previously thought. (March 25) Video provided by AP
Powered by NewsLook.com
Obama: Affordable Care Act 'saving Lives'

Obama: Affordable Care Act 'saving Lives'

AP (Mar. 25, 2015) — Speaking at a White House event marking the fifth anniversary of the Affordable Care Act, President Barack Obama says the law is "saving lives that touch all of us." (March 25) Video provided by AP
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
 
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:  

Breaking News:

Strange & Offbeat Stories

 

Science & Society

Business & Industry

Education & Learning

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:  

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile iPhone Android Web
Follow Facebook Twitter Google+
Subscribe RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins