Abstract
Accurate forecasts are essential in many areas such as business and sports forecasting. Prediction markets are a promising approach for forecasting future events and are increasingly used to aggregate information on particular future events of interest such as elections, sports events, and Oscar winners. In this paper, we present the results of an empirical study that compares the forecast accuracy of a prediction market for the FIFA World Cup 2006 to predictions derived from the FIFA world ranking and to a random predictor. We find that prediction markets for the FIFA World Cup outperform predictions based on the FIFA world ranking as well as the random predictor in terms of forecast accuracy.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Glosten, L.R., Milgrom, P.R.: Bid, Ask and Transaction Prices in a Specialist Market With Heterogeneously Informed Traders. Journal of Financial Economics 14, 71–100 (1985)
Hayek, F.A.v.: The Use of Knowledge in Society. American Economic Review 35(4), 519–530 (1945)
Fama, E.F.: Efficient Capital Markets: A Review of Theory and Empirical Work. Journal of Finance 25, 383–417 (1970)
Fama, E.F.: Efficient Capital Markets: II. Journal of Finance 46(5), 1575–1617 (1991)
Servan-Schreiber, E., et al.: Prediction Markets: Does Money Matter? Electronic Markets 14(3), 243–251 (2004)
Spann, M.: Internet-Based Virtual Stock Markets for Business Forecasting. Management Science 49(10), 1310–1326 (2003)
Plott, C.R., Chen, K.-Y.: Information Aggregation Mechanisms: Concept, Design and Implementation for a Sales Forecasting Problem, California Institute of Technology (2002)
Ortner, G.: Aktienmärkte als Industrielles Vorhersagemodell. Zeitschrift für Betriebswirtschaft (ZfB) - Ergänzungsheft 70, 115–125 (2000)
Plott, C.R.: Markets as Information Gathering Tools. Southern Economic Journal 67, 1–15 (2000)
Forsythe, R., et al.: Anatomy of an Experimental Political Stock Market. American Economic Review 82, 1142–1161 (1992)
Berg, J.E., et al.: Results from a Dozen Years of Election Futures Markets Research. In: Plott, C., Smith, V.L. (eds.) Handbook of Experimental Economic Results (2001)
Sunstein, C.R.: Deliberation and Information Markets, in Information Markets: A New Way of Making Decisions. In: Hahn, W., Tetlock, P.C. (eds.) pp. 67–100. AEI-Brookings Press, Washington D.C (2006)
Lamare, A.: Hollywood Stock Exchange (HSX.com) Traders correctly picked 7 out of 8 Top Category Oscar Winners to continue its stellar record, cited (2007) Available from: http://www.hsx.com/about/press/070226.htm
Pennock, D.M., et al.: The Power of Play: Efficiency and Forecast Accuracy of Web Market Games, in Technical Report, 2000-168. 2001, NEC Research Institute
Schmidt, C., Werwatz, A.: How well do markets predict the outcome of an event? The Euro 2000 soccer championships experiment, in Discussion Papers on Strategic Interaction. Max Planck Institute for Research into Economic Systems, Jena, Germany (2002)
Volkland, H.O., Strobel, M.: Surprise, surprise - On the accuracy of the 2002 FIFA Wold Cup prediction markets (2007)
Spann, M., Skiera, B.: Sports Forecasting: A Comparison of the Forecast Accuracy of Virtual Stock Markets, Betting Odds and Tipsters, Working Paper, University of Passau (2007)
Author information
Authors and Affiliations
Editor information
Rights and permissions
Copyright information
© 2008 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Luckner, S., Schröder, J., Slamka, C. (2008). On the Forecast Accuracy of Sports Prediction Markets. In: Gimpel, H., Jennings, N.R., Kersten, G.E., Ockenfels, A., Weinhardt, C. (eds) Negotiation, Auctions, and Market Engineering. Lecture Notes in Business Information Processing, vol 2. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-77554-6_17
Download citation
DOI: https://doi.org/10.1007/978-3-540-77554-6_17
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-77553-9
Online ISBN: 978-3-540-77554-6
eBook Packages: Computer ScienceComputer Science (R0)