Editing Prediction market (section)

==History==
Before the era of scientific polling, early forms of prediction markets often existed in the form of [[Political forecasting|political betting]]. One such political bet dates back to 1503, in which people bet on who would be the papal successor. Even then, it was already considered "an old practice".<ref>{{Cite journal |last1=Rhode |first1=Paul |last2=Strumpf |first2=Koleman |year=2008 |title=Historical Election Betting Markets: An International Perspective |url=http://users.wfu.edu/strumpks/papers/Int_Election_Betting_Formatted_FINAL_NoComments.pdf |journal=Perspectives on Politics}}</ref> According to Paul Rhode and Koleman Strumpf, who have researched the history of prediction markets, there are records of election betting in Wall Street dating back to 1884.<ref>{{Cite journal |last1=Rhode |first1=Paul |last2=Strumpf |first2=Koleman |year=2004 |title=Historical Presidential Betting Markets. |url=http://users.wfu.edu/strumpks/papers/JEP_2004.pdf |journal=Journal of Economic Perspectives |volume=18 |issue=2 |pages=127–142 |citeseerx=10.1.1.360.4347 |doi=10.1257/0895330041371277}}</ref> Rhode and Strumpf estimate that average betting turnover per US presidential election is equivalent to over 50 percent of the campaign spend.

As far back as 1907, [[Francis Galton]] found that the median estimate of a group can be more accurate than individual expert estimates.<ref>{{Cite journal |last=Galton |first=Francis |date=1907 |title=Vox Populi |url=https://www.nature.com/articles/075450a0 |journal=Nature |language=en |volume=75 |issue=1949 |pages=450–451 |doi=10.1038/075450a0 |issn=0028-0836 |doi-access=free}}</ref> This is now known as the [[wisdom of the crowd]].<ref>{{cite journal |title=How social influence can undermine the wisdom of crowd effect |date=16 May 2011 |author=Jan Lorenz, Heiko Rauhut, Frank Schweitzer, and Dirk Helbing|journal=Proceedings of the National Academy of Sciences |volume=108 |issue=22 |pages=9020–9025 |doi=10.1073/pnas.1008636108 |doi-access=free |pmid=21576485 |bibcode=2011PNAS..108.9020L |pmc=3107299 }}</ref>

Economic theory for the ideas behind prediction markets can be credited to [[Friedrich Hayek]] in his 1945 article "[[The Use of Knowledge in Society]]" and [[Ludwig von Mises]] in his "[[Economic Calculation in the Socialist Commonwealth]]". Modern economists agree that Mises' argument combined with Hayek's elaboration of it, is correct.<ref>"Biography of Ludwig Edler von Mises (1881–1973)", The Concise Encyclopedia of Economics</ref> Prediction markets are championed in [[James Surowiecki]]'s 2004 book ''[[The Wisdom of Crowds]]'', [[Cass Sunstein]]'s 2006 ''Infotopia'', and [[Douglas W. Hubbard|Douglas Hubbard]]'s ''How to Measure Anything: Finding the Value of Intangibles in Business''.<ref name="how-to-measure-anything">Douglas Hubbard "How to Measure Anything: Finding the Value of Intangibles in Business" John Wiley & Sons, 2007</ref> The research literature is collected together in the peer-reviewed [http://ubplj.org/index.php/jpm/index ''The Journal of Prediction Markets''], edited by Leighton Vaughan Williams and published by the [[University of Buckingham]] Press.

===Milestones===
* One of the first modern electronic prediction markets is the [[University of Iowa]]'s [[Iowa Electronic Markets]], introduced during the [[1988 United States presidential election|1988 US presidential election]].<ref name="Angrist-1995">{{Cite web |last=Stanley W. Angrist |date=28 August 1995 |title=Iowa Market Takes Stock of Presidential Candidates (Reprinted with Permission of THE WALL STREET JOURNAL) |url=http://tippie.uiowa.edu/iem/media/wsj.html |url-status=dead |archive-url=https://web.archive.org/web/20121130193428/http://tippie.uiowa.edu/iem/media/wsj.html |archive-date=30 November 2012 |access-date=7 November 2012 |publisher=The University of Iowa, Henry B. Tippie College of Business}}</ref> 
* Around 1990 at [[Project Xanadu]], [[Robin Hanson]] used the first known corporate prediction market. Employees used it in order to bet on, for example, the [[cold fusion]] controversy. <!-- Is this an accurate description? The Project Xanadu page says Hanson *described* Xanadu internally, not that he actually ran it: "According to economist Robin Hanson, in 1990 the first known corporate prediction market was used at Xanadu. Employees and consultants used it for example to bet on the cold fusion controversy at the time." -->
* [[HedgeStreet]], designated in 1991 as a market and regulated by the [[Commodity Futures Trading Commission]], enables Internet [[Trader (finance)|traders]] to speculate on economic events.
*The [[Hollywood Stock Exchange]], a virtual market game established in 1996 and now a division of [[Cantor Fitzgerald|Cantor Fitzgerald, LP]], in which players buy and sell prediction shares of movies, actors, directors, and film-related options, correctly predicted 32 of 2006's 39 big-category [[Academy Awards|Oscar]] nominees and 7 out of 8 top category winners.
* In 2001, [[Intrade.com]] launched a prediction market trading platform from Ireland allowing real money trading between members on contracts related to a number of different categories including business issues, current events, financial topics, and more. Intrade ceased trading in 2013.
* In July 2003, the [[United States Department of Defense|U.S. Department of Defense]] publicized a [[Policy Analysis Market]] on their website, and speculated that additional topics for markets might include [[Terrorism|terrorist]] attacks. A critical backlash quickly denounced the program as a "terrorism futures market" and [[the Pentagon]] hastily canceled the program.
* In 2005, scientific monthly journal ''[[Nature (journal)|Nature]]'' stated how major pharmaceutical company [[Eli Lilly and Company]] used prediction markets to help predict which development drugs might have the best chance of advancing through clinical trials, by using internal markets to forecast outcomes of drug research and development efforts.<ref>{{Cite journal |last1=Polgreen |first1=P. M. |last2=Nelson |first2=F. D. |last3=Neumann |first3=G. R. |last4=Weinstein |first4=R. A. |date=15 January 2007 |title=Use of Prediction Markets to Forecast Infectious Disease Activity |journal=Clinical Infectious Diseases |language=en |volume=44 |issue=2 |pages=272–279 |doi=10.1086/510427 |issn=1058-4838 |pmid=17173231 |doi-access=free}}</ref><ref name="cia.gov">{{Cite web |title=Using Prediction Markets to Enhance US Intelligence Capabilities  |url=https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol50no4/using-prediction-markets-to-enhance-us-intelligence-capabilities.html#_ftn2 |archive-url=https://web.archive.org/web/20070613045642/https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol50no4/using-prediction-markets-to-enhance-us-intelligence-capabilities.html#_ftn2 |url-status=dead |archive-date=13 June 2007 |access-date=3 February 2017 |date= 2007-04-06 |website= Central Intelligence Agency |language=en}}</ref>
* Also in 2005, [[Google Inc]] announced that it has been using prediction markets to forecast product launch dates, new office openings, and many other things of strategic importance. Other companies such as HP and Microsoft also conduct private markets for statistical forecasts.<ref name="cia.gov" />
* In October 2007, companies from the United States, Ireland, Austria, Germany, and Denmark formed the Prediction Market Industry Association,<ref>{{Cite web |title=PMIA |url=http://www.cometoknow.com/prediction-market-industry-association |website=Come to Know |date=October 22, 2007 |last1=Oliver |url-status=dead |archive-url= https://web.archive.org/web/20181030212715/http://www.cometoknow.com/prediction-market-industry-association |archive-date= Oct 30, 2018 }}</ref> tasked with promoting awareness, education, and validation for prediction markets. The current status of the association appears to be defunct.
* In July 2018, the first decentralized prediction market [[Augur (software)|Augur]] was launched on the [[Ethereum]] blockchain.
* In October 2024, [[Kalshi]], a financial exchange and prediction market, won a lawsuit against its regulator, the Commodity Futures Trading Commission, with a [[United States courts of appeals|federal appeals court]] in Washington allowing it to revive the first fully regulated election prediction markets in the United States. Kalshi's court victory over the CFTC opened the market for election markets.<ref name=":2">{{Cite web |last=Harty |first=Declan |date=2024-10-02 |title=Political bettors hit the jackpot as court clears election markets for comeback |url=https://www.politico.com/news/2024/10/02/election-betting-markets-00182165 |access-date=2024-12-11 |website=POLITICO |language=en}}</ref><ref name=":3">{{Cite web |last=Blackburn |first=Piper Hudspeth |date=2024-10-02 |title=Federal appeals court allows prediction market Kalshi to offer US election betting |url=https://edition.cnn.com/2024/10/02/business/appeals-court-allows-kalshi-election-betting/index.html |access-date=2024-12-11 |website=CNN |language=en}}</ref><ref name=":4">{{Cite web |last=Matthews |first=Laura |date=October 2, 2024 |title=US appeals court clears Kalshi to restart elections betting |url=https://www.reuters.com/legal/us-federal-court-upholds-ruling-letting-kalshiex-list-election-betting-contracts-2024-10-02/ |website=[[Reuters]]}}</ref>