“play-money prediction markets can match real-money ones in forecasting accuracy”
A landmark experimental study comparing the accuracy of real-money (TradeSports) versus play-money (NewsFutures) prediction markets during the 2003-2004 NFL season. Both market types showed significant predictive power and remarkably similar accuracy — the play-money markets performed as well as the real-money markets. The authors hypothesize that this reflects two countervailing forces: real-money markets better motivate information discovery, while play-money markets may yield more efficient information aggregation by attracting a larger and more diverse pool of traders unconstrained by gambling regulations.
Some technical background helpful
Platforms mentioned: TradeSports, NewsFutures, Iowa Electronic Markets