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Valuations from " prediction markets " reveal expectations about the likelihood of events. " Conditional prediction markets " reveal expectations conditional on other events occurring. For example, in 1996, the Iowa Electronic Markets (IEM) ran markets to predict the chances that different candidates would become the Republican Presidential nominee. Other(More)
" Prediction markets " are designed specifically to forecast events such as elections. Though election prediction markets have been conducted for almost twenty years, to date nearly all evidence on efficiency compares election eve forecasts to final pre-election polls and actual outcomes. Here, we present evidence that prediction markets outperform polls(More)
Thomas A. Rietz (1988) proposes that the possibility of rare disasters (such as economic depressions or wars) is a major determinant of asset risk premia. Robert J. Barro (2006) shows that, internationally, disasters have been sufficiently frequent and large enough to make the Rietz proposal viable, and they account for a high equity premium. The(More)
* This is a preliminary and incomplete draft. Please do not circulate or quote without permission. Abstract In theory, concepts of market efficiency are conveniently ordered: "Strong form" efficiency implies prices reflect all public and private information, "semi-strong form" implies they reflect only public information and "weak form" implies they reflect(More)
Twenty years ago, Thomas A. Rietz (1988) showed that infrequent, large drops in consumption make the theoretical equity premium large. Recent research has resurrected this 'disaster'expla-nation of the equity premium puzzle. Robert J. Barro (2006) measures disasters during the XXth century, and …nds that they are frequent and large enough, and stock returns(More)
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