How to Predict Market Behaviour Based on Elections

Too Long; Didn't Read

Prediction markets are a subject that has interested me for many years. The idea of allowing anyone in the public to make bets about future events, and using the odds at which these bets are made as a credibly neutral source of predicted probabilities of these events, is a fascinating application of mechanism design. Closely related ideas, like futarchy, have always interested me as innovative tools that could improve governance and decision-making. And as Augur and Omen, and more recently PolyMarket, have shown, prediction markets are a fascinating application of blockchains (in all three cases, Ethereum) as well. And the 2020 US presidential election, it seems like prediction markets are finally entering the limelight, with blockchain-based markets in particular growing from near-zero in 2016 to millions of dollars of volume in 2020.