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Prediction Markets

Part 5. Product Innovation and Management

  1. Thomas S. Gruca

Published Online: 15 DEC 2010

DOI: 10.1002/9781444316568.wiem05052

Wiley International Encyclopedia of Marketing

Wiley International Encyclopedia of Marketing

How to Cite

Gruca, T. S. 2010. Prediction Markets. Wiley International Encyclopedia of Marketing. 5.

Author Information

  1. University of Iowa, Iowa City, IA, USA

Publication History

  1. Published Online: 15 DEC 2010

Abstract

A prediction market is a market-based method for aggregating disparate sources of public and private information about future events. Prediction markets have been generating highly accurate forecasts of election outcomes for more than 20 years. More recently, prediction markets have been successfully used to forecast product sales and new movie box office revenues. Some challenges to using prediction markets include identifying appropriate traders and motivating traders (e.g., due to regulations on futures trading). Similar market-based methods have been developed for preference measurement and new-product idea generation and evaluation.

Keywords:

  • collective intelligence;
  • forecasting;
  • sales forecasting;
  • new-product forecasting;
  • preference measurement;
  • concept testing