INCENTIVE AND ACCURACY ISSUES IN MOVIE PREDICTION MARKETS

We compare the forecasts of nineteen movie box office results from real money (Iowa Electronic Market) and play money (Hollywood Stock Exchange) prediction markets. The forecasts were not significantly different, contrary to recent research on incentives and prediction market accuracy. Proponents of play money incentives suggest that (play) wealth concentrates in the hands of knowledgeable traders over time. This should lead to improved accuracy...