Wednesday, April 2, 2008
According to a story here, NewsFutures.com is an Internet-based news prediction market that operates much like the stock market. Using a fake currency called X$, participants buy and sell shares at prices ranging from X$1 to X$100. Contracts are sold alongside shares for the opposite outcomes. If the event occurs, the shareholder receives X$100 for each share. The trading price of each share represents the probability traders collectively assign to the event occurring. If "President Bush will pardon Scooter Libby" is trading at X$73, for instance, it means participants believe there is a 73 percent chance the president will grant the pardon. Well, I guess that solves that.