Authors: Gruca, Thomas S.; Berg, Joyce E.; Cipriano, Michael

Source: The Journal of Prediction Markets, Volume 2, Number 1, May 2008 , pp. 29-43(15)

Publisher: University of Buckingham Press

Abstract:

We compare the forecasts of nineteen movie box office results from real money (Iowa Electronic Market) and play money (Hollywood Stock Exchange) prediction markets. The forecasts were not significantly different, contrary to recent research on incentives and prediction market accuracy. Proponents of play money incentives suggest that (play) wealth concentrates in the hands of knowledgeable traders over time. This should lead to improved accuracy over time. A longitudinal analysis of results (1999-2002) from the play money Hollywood Stock Exchange fails to find significant improvement over time. This may be due to an increased number of less knowledgeable traders who, nevertheless, provide liquidity in the market.

Document Type: Research article

Publication date: 2008-05-01

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