Write a long commentary paper about this article. The commentary paper must include opinions, interpretations, character and subject’s feelings, personal reactions and evaluations.
Prediction markets are speculative exchanges created for the purpose of making accurate forecasts. Tradable assets are created whose final cash value is tied to a particular political event, such as whether the next U.S. president be a Republican or a Democrat, or a specific economic event, such as a change in monetary policy by the Board of Governors of the Federal Reserve System. Speculators who buy low and sell high are rewarded educational and research purposes. The IEM allows traders to for improving the market prediction; those who buy high and sell low are punished for degrading the market prediction. Evidence suggests that prediction markets are often more accurate than the experts. Examples of prediction markets open to the public include the Hollywood Stock Exchange, the lowa Electronic Markets (IEM), and TradeSports, among others. The Hollywood Stock Exchange (http://www.hsx.com) is the futures markets operated by the University of lowa Tippie College of Business. Unlike normal futures markets, the IEM is not-for-profit. The IEM’s low-stakes markets are run for buy and sell contracts based on, among other things, election results and economic indicators. In the fall of 2007, for example, speculators paid 59.9c for a contract that would pay $1 if the Democratic candidate won the 2008 presidential election, and zero otherwise. This means that the market prediction was a 59.9 percent probability of a Democratic victory, versus a 40.1 percent probability of a Democratic defeat. In late−2007,
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