Prediction Markets: Does Money Matter?

@article{ServanSchreiber2004PredictionMD,
  title={Prediction Markets: Does Money Matter?},
  author={Emile Servan-Schreiber and Justin Wolfers and David M. Pennock and Brian Galebach},
  journal={Electronic Markets},
  year={2004},
  volume={14},
  pages={243-251}
}
The accuracy of prediction markets has been documented both for markets based on real-money and those based on play-money. To test how much extra accuracy can be obtained by using real money versus play-money, we set up a real-world online experiment pitting the predictions of TradeSports.com (real-money) against those of NewsFutures.com (play-money) regarding American Football outcomes during the fall — winter 2003 NFL season. As expected, both types of markets exhibited significant prediction… CONTINUE READING

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