Combining Prediction Markets and Forecasting Contests

30 Pages Posted: 4 Apr 2017 Last revised: 6 Apr 2017

See all articles by Alasdair Brown

Alasdair Brown

University of East Anglia (UEA)

J. James Reade

University of Reading, Department of Economics

Date Written: April 5, 2017

Abstract

Two popular methods for aggregating individual forecasts are prediction markets, where participants bet on the outcome of future events, and forecasting contests, where participants are ranked according to the accuracy of their forecasts. Can these methods be used in concert to produce more accurate forecasts? We analyse 1.79 million forecasts on oddsportal.com, a social network for sports tipsters. Tipsters are ranked according to the betting return on their tips. We find that an aggregation of these tips predicts sporting outcomes, after controlling for betting/prediction market prices. Rank-order forecasting contests, even without tangible prizes, are useful tools for eliciting crowd forecasts.

Keywords: Forecasting Contests, Prediction Markets, Sports Betting, Social Networks

JEL Classification: G02, G12, G14

Suggested Citation

Brown, Alasdair and Reade, J. James, Combining Prediction Markets and Forecasting Contests (April 5, 2017). Available at SSRN: https://ssrn.com/abstract=2944675 or http://dx.doi.org/10.2139/ssrn.2944675

Alasdair Brown (Contact Author)

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

J. James Reade

University of Reading, Department of Economics ( email )

Whiteknights
Reading, Berkshire RG6 6AH
United Kingdom

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