Summary of The Regulation and Value of Prediction Markets

Mercatus Center,

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The Regulation and Value of Prediction Markets summary
The forecast could be bright for prediction markets.


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Not everyone would be comfortable betting on a terrorist attack occurring by year-end, but, undoubtedly, better forecasts for such catastrophes could save lives. While many may be skeptical, prediction markets offer one of the best ways to benefit from the wisdom of crowds, says economist Adam Ozimek. getAbstract recommends this noteworthy overview of the state of US prediction markets and the regulatory obstacles they face.

In this summary, you will learn

  • Why prediction markets are so effective at forecasting outcomes,
  • What types of contracts these markets offer,
  • What criticisms prediction markets evoke and
  • How a better understanding of these markets would help regulators.


Prediction markets let participants trade contracts that offer payouts based on future outcomes. These “event contracts” deal in news incidents, economic data, asset values or any other topic that has a clear outcome. While prediction markets offer financial benefits to traders, nontraders can use the...
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About the Author

Adam Ozimek is director of research and senior economist at Econsult Solutions, Inc.

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