Handbook of Economic Forecasting

Chapter 11

Prediction Markets for Economic Forecasting

Erik Snowberg*, Justin Wolfers^† and Eric Zitzewitz^‡,     ^*Division of Humanities and Social Sciences, California Institute of Technology and National Bureau of Economic Research (NBER), USA, ^†University of Michigan and Center for Economic Policy Research (CEPR), CESifo, IZA, and NBER, USA, ^‡Dartmouth College and NBER, USA

Abstract

Prediction markets – markets used to forecast future events – have been used to accurately forecast the outcome of political contests, sporting events, and, occasionally, economic outcomes. This chapter summarizes the latest research on prediction markets in order to further their utilization by economic forecasters. We show that prediction markets have a number ...