Topic: Alpha Version of Prediction Market from Augur Is Out (Read 851 times)

I saw the video but dont get it yet. Shares for predictions? The crowd has to vote on things happening in the future of mankind? Oo It somehow sounds like these betting sites where you can claim the bitcoin price will be that high on that date and others vote yes or now by bidding coins.

Can someone break it down a bit?

A crowd is a crowd only if everybody can join it.
Elite Satoshi roundtable is not a crowd definitely. 

If a picture 1 refers to early Chinese LTC adopters, that probably can be a good illustration for a book about Chinese wisdom. 

So can this be tested and is it useful for, lets say, predicting the development of forex markets or the bitcoin price? In the article it says they want to crowdfund, so is there an alpha version that one can use now?

Interesting paradox...but it is one that's been more-or-less solved by the people picking through these things.

If you have a crowd of people who are basically calm and (!) make their judgements without much reference to what others are doing, you get the "wisdom of crowds."

If you have a crowd of people who are emotion-driven and (!!) make their judgements primarily on others' takes on the matter, you get "the hysteria of mob."

Both sides belong on the ticket, really.

Prediction markets are pretty unintuitive.  You'd expect that an all knowing expert would be able to make better predictions.  The problem is, most "experts" aren't actually experts.

If you look at US Presidential elections and compare polls to the Iowa Electronic Market (a prediction market), the IEM is more accurate every single time.  It's predicted every election correctly for the past 25 years (prior to that, it didn't exist). 

Almost all economic studies show prediction markets are one of the most accurate tools to predict future events, it's one of the few things economists are actually in agreement on.  One key thing is, prediction markets are good for predicting _events_.  A prediction market predicting the stock market wouldn't do much besides mirror the stock market (because the stock market itself is a prediction market on the future value of companies).

Prediction markets work for two main reasons 1) they use markets to reveal information in a price/odds estimate that otherwise wouldn't have been revealed, and it can be revealed anonymously and 2) if you have enough volume/a large enough crowd, their errors cancel out and an accurate forecast emerges.  2 is why over 95% of mutual fund managers can't beat something as simple as the S&P 500, and of course, we don't propose that prediction markets can do any better at predicting the stock market than they can.  We do propose, however, that they're better at predicting events.

I have never seen a crowd of millionaires...

To refer to another old book, I would strongly recommend this one 
The Revolt of the Masses (1930)
http://pinkmonkey.com/dl/library1/revolt.pdf

Interesting. I havent read the book and I dont know the theory...but crowd being good at predicting market doesnt sound too true to me. From my experience, crowd is always wrong and those individuals that goes against it make money. Can someone elaborate more?

https://i.imgur.com/H3CspDK.jpg?1

The platform, which runs over the Ethereum network, uses a principle called wisdom of the crowds,
partially inspired by James Surowiecki's book by the same name. The upshot is that crowds can often
predict the future more accurately than any one person or expert can.