Wisdom Of Crowds: ABC7 Futures Market

Feb.15 - KGO (KGO) -- Who will win the Oscar for best picture? ABC7 is asking you to predict the future on that, and many other questions. That's the idea behind the ABC7 Futures Market being launched Thursday at abc7news.com. The idea is based on the widely popular book "Wisdom of Crowds," which theorizes that the combined intelligence and input of a group can deliver a real outcome.

The ABC7 Futures Market is very different than your typical poll -- it takes the pulse of a crowd to predict an answer.

Adam Siegel: "If you take the average of what a crowd thinks, than more often than not, they are going to get the correct answer."

Adam Siegel is one of the founders of InklingMarkets.com, an online trading site for ideas and opinions. Inkling Markets is partnering with ABC7 to better understand public opinion.

Adam Siegel: "The ABC7 Futures Market is a prediction market -- and what that means is you are capturing the wisdom of a group of people."

Here's how it works -- take a jar of jelly beans, ask people of varying backgrounds to guess how many beans are in the jar. Statistically, the average of all those answers should be close to the exact number of jelly beans in the jar.

Adam Siegel: "You have some people with lots of knowledge, some people have a little knowledge, some people have a hunch. And you take all of that and you combine it, and you come up with a possible answer."

Stanford University economics professor, Eric Zitzewitz, is among those who will be watching the ABC7 Futures Market.

Erik Zitzewitz: "The idea of a prediction market is that we have a specific question we want to answer."

It works really much like the stock market -- you'll be able to use "virtual" cash to "invest" online in the probability that a particular outcome will happen.

Erik Zitzewitz: "So if we want to know what the probability that Hillary Clinton's gonna be elected president in 2008 is? What you do is you open up a prediction market with a security that is worth a dollar if she gets elected, and zero otherwise. You'd have people trade that security. You then could -- if they thought she was going to be elected, they could buy it. If they didn't think so, they could sell it."

The ABC7 Futures Market has no cash value. But statistics show that using even fake currency encourages people to make more educated guesses -- essentially putting their money where their mouth is.

Erik Zitzewitz: "With polling, you are asking a bunch of people what their opinion is. With markets, you are asking people their opinion about people's opinion."

To start, the ABC7 Futures Market is asking who will take home an Oscar. You'll be able to track in real time who people believe will win. Future market ideas will come from current events and suggestions from you.

You'll be able to see how news events shape the race for San Francisco mayor, for example; weigh in on whether Barry Bonds will be indicted in the steroid scandal; or whether the U.S. will use military force against Iran.

Adam Siegel: "For the first time really, the regular public is going to be exposed to this kind of technology, and really be able to participate in something like this."

So how can you join the ABC7 Futures Market? Click here to sign up for free and start trading.

Written/produced by Ken Miguel

Get more News »

• Email
• Print
• Report a typo
•