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For people who don’t know, PredictIt works by drawing in thousands of individuals who buy shares of a contract (such as “Will Donald Trump win the 2024 US presidential election?”) at a price between $0.00 and $1. Each contract will resolve for either $0 or $1. The number of cents per contract (the current price) reflects the probability that the contract will resolve as Yes. In effect, this is a crowdsourced probabilistic forecast.
PredictIt trades are capped at $850 per user per contract. This helps to keep the market small-scale and ensures that wealthy individuals cannot manipulate markets. This protects the sanctity of the crowdsourcing process, and differentiates PredictIt from other financial markets that are dominated by hedge funds and institutional investors.
In its 10 year history, PredictIt has made these crowdsourced probabilistic forecasts available to the public, and makes anonymized trade data available to researchers who study patterns in the data.
Research shows that these forecasts are generally accurate and are generally more accurate than polling, especially earlier in a race. This is because polls are a snapshot in time, but prediction markets allow users to weigh the effect of factors (the criminal conviction of a presidential candidate, for example) that have not yet fully resonated with voters.
