Question A:
Prediction markets provide substantially more accurate forecasts of key macro-financial variables than traditional sources such as surveys of professional forecasters.
Responses
Responses weighted by each expert's confidence
Question B:
Retail market participants would be measurably better off if sports contracts on prediction markets were regulated more like gambling than like financial derivatives.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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 Viral Acharya |
NYU Stern | Bio/Vote History | ||
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Depends on whether the prediction market participants represent a good sampling of investors (firms, households, ....).
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 John Campbell |
Harvard | Bio/Vote History | ||
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 John Cochrane |
Hoover Institution Stanford | Bio/Vote History | ||
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 Douglas Diamond |
Chicago Booth | Bio/Vote History | ||
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 Wenxin Du |
HBS | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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 Eugene Fama |
Chicago Booth | Bio/Vote History | ||
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 Xavier Gabaix |
Harvard | Bio/Vote History | ||
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 Itay Goldstein |
UPenn Wharton | Bio/Vote History | ||
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 John Graham |
Duke Fuqua | Bio/Vote History | ||
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 Campbell R. Harvey |
Duke Fuqua | Bio/Vote History | ||
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1. Prediction markets might be slightly more accurate - they are certainly not "substantially" more accurate. 2. The prediction market data are limited making it challenging to conduct a statistical test.
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 Harrison Hong |
Columbia | Bio/Vote History | ||
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 Wei Jiang |
Emory Goizueta | Bio/Vote History | ||
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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The SPF, in particular, has plenty of stale forecasts. For the prediction markets that are deep, they will do better.
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 Arvind Krishnamurthy |
Stanford GSB | Bio/Vote History | ||
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 Camelia Kuhnen |
UNC Kenan-Flagler | Bio/Vote History | ||
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 Michelle Lowry |
Drexel LeBow | Bio/Vote History | ||
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 Sydney Ludvigson |
NYU | Bio/Vote History | ||
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samples too short
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 Matteo Maggiori |
Stanford GSB | Bio/Vote History | ||
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 Loretta Mester |
UPenn Wharton | Bio/Vote History | ||
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 Tobias Moskowitz |
Yale School of Management | Bio/Vote History | ||
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Markets are better aggregators of information.
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 Tyler Muir |
UCLA Anderson | Bio/Vote History | ||
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Not sure substantially more accurate. The advantage of prediction markets for some macro variables is real-time higher frequency data (particularly useful for measuring real-time responses to events). That provides useful information.
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 Stefan Nagel |
Chicago Booth | Bio/Vote History | ||
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Probably a little better, but given the empirical evidence available so far, not "substantially" so. But clearly more timely.
-see background information here |
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 Dimitris Papanikolaou |
Northwestern Kellogg | Bio/Vote History | ||
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If the outcomes are fairly idiosyncratic and unrelated to aggregate conditions, then this is true assuming prediction markers are fairly liquid and free of manipulation. If the outcomes are related to macro conditions, then prices of these contracts may embed a risk adjustment
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 Jonathan Parker |
MIT Sloan | Bio/Vote History | ||
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Prediction markets provide continuously updated predictions, while survey measures are infrequent and so are often relatively stale.
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 Christine Parlour |
Berkeley Haas | Bio/Vote History | ||
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 Thomas Philippon |
NYU Stern | Did Not Answer | Bio/Vote History | |
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 Manju Puri |
Duke Fuqua | Did Not Answer | Bio/Vote History | |
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 Michael R. Roberts |
UPenn Wharton | Bio/Vote History | ||
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 Paola Sapienza |
Hoover Institution Stanford | Did Not Answer | Bio/Vote History | |
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 Amit Seru |
Stanford GSB | Bio/Vote History | ||
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 Robert Stambaugh |
UPenn Wharton | Bio/Vote History | ||
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 Laura Starks |
UT Austin McCombs | Bio/Vote History | ||
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The research in this area is incomplete.
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 Jeremy Stein |
Harvard | Bio/Vote History | ||
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 Johannes Stroebel |
NYU Stern | Bio/Vote History | ||
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 David Thesmar |
MIT Sloan | Bio/Vote History | ||
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It's adding information to the SPF and other forecasts, it's like adding more forecasters, incentivized but not necessarily as well informed. but it can only reduce the MSE
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 Sheridan Titman |
UT Austin McCombs | Bio/Vote History | ||
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 Stijn Van Nieuwerburgh |
Columbia Business School | Bio/Vote History | ||
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prediction markets are a valuable complement to surveys because they are continuous, high-frequency, incentive-compatible, and can reveal a full probability distribution rather than just point forecasts or forecaster disagreement.
-see background information here |
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 Nancy Wallace |
Berkeley Haas | Bio/Vote History | ||
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The potential for financially related manipulation is substantially higher with poly-market type betting.
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 Toni Whited |
UMich Ross School | Bio/Vote History | ||
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 Haoxiang Zhu |
MIT Sloan | Bio/Vote History | ||
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Eventually, prediction markets can prove useful in aggregation information about macroeconomic conditions, but a prerequisite is meaningful investor participation.
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Viral Acharya |
NYU Stern | Bio/Vote History | ||
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Again,this could depend on the kind of series that is being forecasted based on the bets. In some cases, retail investors would be better off not being ripped off by insiders privy to information. In others, they could be better off just not taking on leverage or bets.
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John Campbell |
Harvard | Bio/Vote History | ||
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Sports contracts on prediction markets have attracted extraordinary volume because they sidestep state gambling regulations. This creates meaningful risk of gambling addiction (witness the recent case of the New Haven, CT police chief).
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John Cochrane |
Hoover Institution Stanford | Bio/Vote History | ||
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Douglas Diamond |
Chicago Booth | Bio/Vote History | ||
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Wenxin Du |
HBS | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Although the CFTC is more expert on insider trading, it may not be as well tuned to consumer protection issues that come up in gambling. It's a judgement call here.
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Eugene Fama |
Chicago Booth | Bio/Vote History | ||
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Xavier Gabaix |
Harvard | Bio/Vote History | ||
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Itay Goldstein |
UPenn Wharton | Bio/Vote History | ||
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John Graham |
Duke Fuqua | Bio/Vote History | ||
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Campbell R. Harvey |
Duke Fuqua | Bio/Vote History | ||
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In the current regulated sports-better regime, the vig is 5-10%. In predictions markets, the fees are only 1-2%. If being sport-betting regulation of prediction markets increases costs similar the current sports betting market, that is bad for users.
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Harrison Hong |
Columbia | Bio/Vote History | ||
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Wei Jiang |
Emory Goizueta | Bio/Vote History | ||
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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A lot of the really troubling stuff is illegal either way, probably depends on how well enforced the rules will be and that depends on the resources of the regulators.
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Arvind Krishnamurthy |
Stanford GSB | Bio/Vote History | ||
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Camelia Kuhnen |
UNC Kenan-Flagler | Bio/Vote History | ||
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Michelle Lowry |
Drexel LeBow | Bio/Vote History | ||
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Sydney Ludvigson |
NYU | Bio/Vote History | ||
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An essentially contested concept. Be they gamblers or traders, everyone wants to be "better off," but no agreement on what that means
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Matteo Maggiori |
Stanford GSB | Bio/Vote History | ||
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Loretta Mester |
UPenn Wharton | Bio/Vote History | ||
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If it looks like a duck and quacks like a duck, it's a duck (and should be subject to the same set of regulations regardless of platform).
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Tobias Moskowitz |
Yale School of Management | Bio/Vote History | ||
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Markets are far more efficient and transparent than gambling books and provide continuous pricing, market clearing, and informational efficiency.
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Tyler Muir |
UCLA Anderson | Bio/Vote History | ||
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I agree that is what they are. I am uncertain on measurably better off. Sports gambling is already now legal in most states
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Stefan Nagel |
Chicago Booth | Bio/Vote History | ||
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Depends on prevalence and weighting of enjoyment/fun vs. self-control problems, addiction, etc.
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Dimitris Papanikolaou |
Northwestern Kellogg | Bio/Vote History | ||
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Jonathan Parker |
MIT Sloan | Bio/Vote History | ||
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Gambling platforms do fine while protecting those with addiction problems or financial ill literacy, and while regulated to prevent fraud and consumer abuse, but also competition under a common regulatory framework would be good for consumers.
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Christine Parlour |
Berkeley Haas | Bio/Vote History | ||
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Thomas Philippon |
NYU Stern | Did Not Answer | Bio/Vote History | |
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Manju Puri |
Duke Fuqua | Did Not Answer | Bio/Vote History | |
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Michael R. Roberts |
UPenn Wharton | Bio/Vote History | ||
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Paola Sapienza |
Hoover Institution Stanford | Did Not Answer | Bio/Vote History | |
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Amit Seru |
Stanford GSB | Bio/Vote History | ||
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Robert Stambaugh |
UPenn Wharton | Bio/Vote History | ||
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Laura Starks |
UT Austin McCombs | Bio/Vote History | ||
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It depends on how measurably better off is defined. They could benefit from greater consumer protection measures, but there could also be higher costs and less access.
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Jeremy Stein |
Harvard | Bio/Vote History | ||
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Johannes Stroebel |
NYU Stern | Bio/Vote History | ||
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David Thesmar |
MIT Sloan | Bio/Vote History | ||
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Gambling leads to very well-documented and severe addiction, hence the logic for invasive paternalistic regulation. I would be very hesitant to extend such a regulation until the addiction concerns are documented.
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Sheridan Titman |
UT Austin McCombs | Bio/Vote History | ||
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Stijn Van Nieuwerburgh |
Columbia Business School | Bio/Vote History | ||
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Sports prediction contracts appear much closer to gambling than to socially useful derivatives. The evidence on sports betting points to overoptimism, losses, and self-control problems among retail participants, which supports gambling-style consumer protection.
-see background information here |
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Nancy Wallace |
Berkeley Haas | Bio/Vote History | ||
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Given the current lack of oversight including the recent basketball manipulation scandals, the potential and realized experience in other professional sports, and the increased monetization of college athletes and sports via broadcasting royalty contracts to universities.
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Toni Whited |
UMich Ross School | Bio/Vote History | ||
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Haoxiang Zhu |
MIT Sloan | Bio/Vote History | ||
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The CFTC regulatory framework at the Federal level is designed primarily for professional investors and large market participants, not for retail investors.
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