Predicting Politics: Professors Model Prediction Markets
Monday, January 19, 2009 - 23:14
in Mathematics & Economics
Political prediction markets accurately predicted Barack Obama's 2008 victory. Now researchers have determined that these markets behave similar to financial markets, except when traders' partisan feelings get in the way (as they did in the 2000 presidential election). The researchers have created a model of how prices fluctuate in these prediction markets -- a model that could eventually be used to tell how certain events affect the outcomes of elections.