Sunday, May 21, 2006

London School of Economics Research

Jed Christiansen, a long time follower of the prediction market community and a student of the London School of Economics is partnering with Inkling to conduct research for his graduate studies.

In the coming days we will be launching a separate site for Jed to run his own markets. He may be asking for volunteers to participate in his markets so be on the lookout for further announcements. Here is a brief description of Jed’s research:

The ability of groups of non-experts to outperform individual experts was recently popularized in the book “The Wisdom of Crowds,” by James Surowiecki. While a good amount of research has been done in the field of Prediction Markets, there is little empirical evidence that proves that groups out-perform experts, and even less when very small groups (so-called “thin markets”) are used.

My graduate project with the London School of Economics will examine if a group of non-experts can beat the judgement of experts, and the dynamics of how and why that occurs. I intend to demonstrate through experiments run at that a small group of non experts with no background in financial markets or market models can easily learn to express their opinions by trading and in doing so beat expert predictions. By following up with users and comparing the data they used to make judgements with the data the experts used to make judgements should yield insights into why Prediction Markets can be a powerful decision-making tool.

If other members of the academic community are interested in using Inkling as a research tool, please contact us; we would be happy to brainstorm about how we can work together.

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