Prediction markets: Do they predict the polls or the election results? The case of the Israeli elections in april 2019

Rachel Calipha, Itzhak Venezia

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

Abstract

Prediction markets have been found to provide relatively accurate and inexpensive means for forecasting various events including elections results. However, since in most political elections, there exist public polls that predict the results as well as betting houses that publish odds on the various candidates and since voters obtain information from these sources, the marginal contribution of prediction markets is uncertain and needs to be assessed empirically. In this chapter, we investigate the correlations between poll results and prediction markets results throughout the election campaign in Israel prior to the April 2019 elections and compare their accuracy. We show that although correlated and influenced by the polls, prediction markets have some value. Given their minimal costs of operation, such markets are worthwhile.

Original languageEnglish
Title of host publicationBehavioral Finance
Subtitle of host publicationA Novel Approach
PublisherWorld Scientific Publishing Co.
Pages3-17
Number of pages15
ISBN (Electronic)9789811229251
DOIs
StatePublished - 1 Jan 2020
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2021 World Scientific Publishing Company.

Keywords

  • Israeli elections
  • Political stock markets forecasting
  • Polls
  • Prediction markets

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