ABC7 Futures Market proving reliable

February 6, 2008 8:23:24 PM PST
It's been almost a year since we launched the first local news prediction market in the country and it's proven to be a valuable tool.

Who will win the Democratic and Republic nominations for President? According to the ABC7 Futures Market, John McCain has the race locked up with a 96 percent chance of winning the Republican nomination. Among Democrats, Barack Obama has a strong lead over Hillary Clinton.

Our traders were right about baseball slugger Barry Bonds being indicted on perjury charges. They also knew the Fed would cut interest rates by more than a half a percent in January.

They were wrong about the Super Bowl, but then again, who would have seen the New York Giants winning in the end?

The fact is, more often than not, the ABC7 Futures Market traders correctly predicted the outcome of news events.

"Your crowd has been doing quite well," says Adam Siegel, founder of Inklingmarkets.com.

Inklingmarkets.com is an online trading site for ideas and opinions. Inkling Markets has partnered with ABC7 to better understand public opinion. Siegel spoke with us from Chicago.

"When you look at success in a prediction market you are looking at probabilities being high and then that event actually occurring. And when the probability has been high in your markets, that event has typically occurred," says Siegel.

In fact, nearly 85 percent of the time, viewers participating in the ABC7 Futures Market have correctly predicted the outcome of news events.

"It's fun. I mean I try not to take it too seriously, but you can't help it sometimes. I've gotten a couple of friends involved," says Debbie Johnson, an ABC7 Futures Market trader.

Johnson, a San Mateo bookkeeper, is one of our top traders.

Our markets work much like the stock market. You use virtual cash to invest online in the probability that a particular outcome will happen. The idea behind it? If you have something to lose, you are more likely to think twice before being frivolous with your prediction.

"I guess I am thinking right, because I am always thinking I am not. You always think it's just you until you hear somebody else, which I think is kind of nice."

People like Johnson have discovered the power in collective thinking. That is, the more people who participate, the more likely the market will correctly predict the outcome.

"Prediction markets on who is going to win an election are more accurate then the final Gallup poll," says Eric Zitzewitz, a Dartmouth College economics professor and expert in prediction markets.

Zitzewitz has been watching the ABC7 Futures Market evolve. He is also one of our market's top traders.

"You're still the only local news station that I am aware of that is doing [it], but we are seeing other media organizations pick up on the idea. The Financial Times over in Europe is running prediction markets in partnership with Intrade, and CNN has just started running a series of political prediction markets."

In fact, the success of the ABC7 Futures Market is credited with much of that expansion.

"Political markets and things on a national scale have been done many times, but things on a local scale hadn't been done really. And so it's been an interesting experiment to watch and I think it's been a successful one," says Siegel.

So how can you get in on the action? Head to the ABC7 Futures Market by clicking here. It's completely free and a whole lot of fun.

Written and produced by Ken Miguel


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