TY  - JOUR
AU  - Snowberg,Erik
AU  - Wolfers,Justin
AU  - Zitzewitz,Eric
TI  - Prediction Markets for Economic Forecasting
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 18222
PY  - 2012
Y2  - July 2012
UR  - http://www.nber.org/papers/w18222
L1  - http://www.nber.org/papers/w18222.pdf
N1  - Author contact info:
Erik Snowberg
Division of Humanities and Social Sciences
MC 228-77
California Institute of Technology
Pasadena, CA 91125
Tel: 626/395-4094
E-Mail: snowberg@caltech.edu

Justin Wolfers
Department of Economics
University of Michigan
611 Tappan St
Lorch Hall #319
Ann Arbor, MI 48104
Tel: 734-764-2447
E-Mail: jwolfers@umich.edu

Eric Zitzewitz
Department of Economics
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: 603/646-2891
Fax: 603/646-2122
E-Mail: eric.zitzewitz@dartmouth.edu
AB  - Prediction markets--markets used to forecast future events--have been used to accurately forecast the outcome of political contests, sporting events, and, occasionally, economic outcomes. This chapter summarizes the latest research on prediction markets in order to further their utilization by economic forecasters. We show that prediction markets have a number of attractive features: they quickly incorporate new information, are largely efficient, and impervious to manipulation. Moreover, markets generally exhibit lower statistical errors than professional forecasters and polls. Finally, we show how markets can be used to both uncover the economic model behind forecasts, as well as test existing economic models.
ER  -