does money matter? emile servan-schreiber newsfutures, inc
Post on 20-Dec-2015
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Does Money Matter?
Emile Servan-SchreiberNewsFutures, Inc
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It’s an important issue
• When you want to bring markets within companies;
• For US-based public-policy markets;
• How much accuracy is at stake when you forgo real-money for play-money?
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The Challenge
vs
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More than 200 individual games
Price = ProbabilityAcquire or lose points through a scoring rule
New England Patriots over Philadelphia Eagles
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Absolute Accumulation of Pointsin the Probability Football Contest
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1 3 5 7 9 11 13 15 17 19 21
Week into the NFL season
Servan-Schreiber, Wolfers, Pennock & Galebach (2004)Prediction Markets: Does Money Matter? Electronic Markets, 14(3).
Tradesports vs. NewsFutures(predicting NFL games)
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Absolute Accumulation of Pointsin the Probability Football Contest
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1 3 5 7 9 11 13 15 17 19 21
Week into the NFL season
Tradesports vs. NewsFutures(predicting NFL games)
Servan-Schreiber, Wolfers, Pennock & Galebach (2004)Prediction Markets: Does Money Matter? Electronic Markets, 14(3).
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Absolute Accumulation of Pointsin the Probability Football Contest
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1 3 5 7 9 11 13 15 17 19 21
Week into the NFL season
Using real-moneydoesn’t buy any
additional accuracyas long as the tradersare knowledgeable
and motivated(upside).
Real Cash vs. Play Money(predicting NFL games)
Servan-Schreiber, Wolfers, Pennock & Galebach (2004)Prediction Markets: Does Money Matter? Electronic Markets, 14(3).
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Markets vs Individual Experts
NewsFutures’ markets finished in the top 0.4%Competing against 1810 individual NFL experts
In the Probability Football contest(rank = 6th / 1810)
Servan-Schreiber, Wolfers, Pennock & Galebach (2004)Prediction Markets: Does Money Matter? Electronic Markets, 14(3).
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Prediction Performance of MarketsRelative to Individual Experts
020406080
100120140160180200220240260280300
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Week into the NFL season
Ra
nk NewsFutures
Tradesports
Thanks to their consistent accuracy over the entire season, the markets progressively beat most individual “experts”.
Markets vs Individual Experts
Servan-Schreiber, Wolfers, Pennock & Galebach (2004)Prediction Markets: Does Money Matter? Electronic Markets, 14(3).
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Google IPO Market
Google Market Cap - End of 1st day (8/19)
10
15
20
25
30
35
40
Fo
rec
as
t M
ark
et
Ca
p (
$ B
illio
n)
TRIF (wta)
Actual
IPO-cap
IEM (wta)
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Bush 2004 Contract
A Bush “blowout” or “too-close-to-call”?
50%chance
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An unusually close election
• Smallest popular vote margin of victory (2.7%) for an incumbent president since 1828.
• It all came down to 60,000 votes in Ohio.