Prediction markets work better than experts 

In a world filled with experts of all kinds, prediction markets have suddenly emerged as a powerful tool for forecasting the future. 

A week ago, Bloomberg integrated Polymarket election data into its Terminal. This is the most popular financial data platform for institutions with about 350K subscribers throughout the world. This move revealed a surprising truth. It turned out that prediction markets are more accurate than experts.

How can that be? I was very surprised to hear that.  

The reason is that experts rely on their specialized knowledge to make forecasts. Though experts can provide valuable insights, their predictions may not be that accurate. Actually, they perform even worse as they are heavily biased. Sometimes overconfidence is in the way. It clouds their judgment. Even statistical methods work better.

What’s bad is that they create a false sense of security since you think you are protected by their level of expertise. They are more trusted and therefore can be misleading for people following them. 

This is where the wisdom of crowds comes into play. Prediction markets aggregate the diverse opinions and knowledge of a broad group of participants. The collective intelligence that emerges is often more reliable. It was accurately predicted, for instance, that Robert. F Kennedy Jr. would exit the presidential race before September.

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