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How iPredict Works

iPredict is a prediction market, a place where people trade contracts or ‘stocks’ on an exchange, a little like a stock market.

In this market, however, the stock is special. Stock pay $1 each if an event comes true, and nothing otherwise.

The price those stock trade for is the prediction.

For example, Bill Smith is running for an election. His iPredict stock is trading at 65 cents: the market’s prediction is that Bill Smith will win the election with probability 65%.

On iPredict, you make money by buying low and selling high. If you think Bill Smith is going to lose, buy some stock in the opponent you think is going to win. If you’re right, you can turn your opinon into real returns.

The secret of prediction markets harness the wisdom of crowds. Inside every trader’s head are ideas about the future. Traders use their ideas to buy and sell stocks on our markets.

The price that emerges from this trading represents the sum total of the crowd’s wisdom.

Prediction markets work. In every head-to-head comparison of prediction markets against rival forecasting methods over the last twenty years, prediction markets have trumped the competition.

For example, since inventing prediction markets in 1988, the University of Iowa has successfully predicted every US Presidential race. The accuracy of Iowa’s prediction markets were compared with 964 polls taken in the five presidential races that occurred in that time, and came out on top three out of four times.

Prediction markets beat political polling for two reasons. First, they ask the right question. Pollsters ask who you will vote for. Prediction markets ask who is going to win. Second, prediction market traders put money where their mouth is so it pays to do a little homework.

If you want to know what is going to happen in the future, whether it be an election or sales next quarter, ask a prediction market.