Prediction markets as a vital part of collective intelligence

Abstract

Nowadays, collective intelligence becomes more and more popular. Despite its high usability, many aspects of collective intelligence stay unexplored. Many companies have recognized the potential of collective intelligence and have begun using it. Prediction markets are the real life implementation of collective intelligence. The fact that prediction markets outperform experts makes it a great tool for predicting the future. In this paper, we try to answer important questions that have to be asked before the creation of a prediction market e. g. “What factors influence the prediction market error and how could this be minimized?”. This paper treats the problems more broadly. Therefore, the areas of collective intelligence that have a strong influence on prediction markets are also included in the problem analysis.