Prediction Markets as a Mechanism for Public Engagement? A First Classification and Open Questions

By Andreas Graefe and Carsten Orwat.

Published by The Technology Collection

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Article: Print $US10.00
Article: Electronic $US5.00

Prediction markets are becoming increasingly popular because of their astounding performance in terms of forecasting or decision-making. In particular, they enable arbitrarily composed groups of people to accurately predict future events by buying and selling virtual stocks that represent a bet on the outcome of those events. These predictions are often more accurate than traditional opinion polls or judgments of individual experts. This is especially interesting for activities of public engagement, which usually call for a preferably broad involvement of participants in order to improve the reliability and acceptability of public decisions. The present paper describes the general concept of prediction markets and introduces the method to the field of public engagement. In particular, an existing typology is adopted for the classification of prediction markets among public engagement mechanisms. We find out that prediction markets enable a new and unique type of public engagement mechanisms, which provides answers to specific questions by aggregating information from preferably large, arbitrarily composed samples in a structured manner. Yet, further research is needed to evaluate and establish prediction markets in the field of public engagement.

Keywords: Prediction Markets, Public Engagement, Participation, Forecasting, Foresight, Information Markets

The International Journal of Technology, Knowledge and Society, Volume 3, Issue 4, pp.137-142. Article: Print (Spiral Bound). Article: Electronic (PDF File; 532.648KB).

Andreas Graefe

PhD Student, Institute for Technology Assessment and Systems Analysis (ITAS), Institute for Technology Assessment and Systems Analysis, Karlsruhe, Germany

Since January 2006 Andreas Graefe is research assistant and PhD student at the Institute for Technology Assessment and Systems Analysis (Research Center Karlsruhe). Andreas holds a diploma in Economics and a diploma in Information Systems. In his dissertation, he works on the application of prediction markets (also known as information markets) for the fields of technology assessment and foresight.

Dr. Carsten Orwat

Senior researcher, Institute for Technology Assessment and Systems Analysis (ITAS), Institute for Technology Assessment and Systems Analysis, Karlsruhe, Germany

Carsten Orwat is senior researcher at the Institute for Technology Assessment and Systems Analysis (ITAS) at the Forschungszentrum Karlsruhe (FZK). He holds a diploma and Ph.D. in economics. He has been involved in several research projects dealing with technology assessment and foresight of information and communication technologies, especially digital products, digital rights management and ubiquitous computing.

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