There seems to be some misunderstanding of prediction markets and some readers think they are no better than polling so I've added a quote from a WSJ article on the Iowa Electronic Market's' website which explains why these markets are, in fact, a very good tool and better than polls as far as monitoring the odds of a candidate getting elected. Hope this ads value to this post and useful information about these markets to the readers.
Begin quote:
"The premise behind the IEM, which was first used in the 1988 presidential election, is that voters don't have any incentive to tell pollsters the truth. But when their own money is on the line, people will act on information that affects the chances the candidates have of winning or losing an election.
"There is a strong incentive for players in these political markets to process information about the candidates and their conclusions are revealed to us through the markets' prices," says Steven Feinstein, an assistant professor of finance at Boston University's School of Management. The IEM works on the same principle as any futures market, he says."
End Quote
Read More