The notion is that people with skin in the game are incentivized to bet rationally on the election, and collectively, the markets show a dependable snapshot of news by incorporating all types of different information.
On Election Day, market prices can swing dramatically as early exit poll information or on-the-ground reports come in. Markets quickly react to all of this news, reflecting public sentiment in real-time.
Since traders put real money behind their predictions, prediction markets are often seen as potentially more accurate reflections of belief than traditional polls.
Prediction markets draw in participants from all walks of life, including politically engaged individuals, analysts, and casual observers. This diversity helps markets aggregate a broad range of perspectives and knowledge.
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