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This is the final section of notes from the London Prediction Market Conference, held on October 11-12. Click here for Part 1, and click here for Part 2.

** Jed Christiansen - Mercury Research & Consulting (me) **

My talk was essentially the same as my talk at ConsensusPoint’s New York conference in September. I explained a bit more about my research project, which was published in the first issue of the Journal of Prediction Markets. I ran a series of prediction markets (using the Inkling platform) in the summer of 2006.

The problem with many business prediction markets is that only a small number of people may know enough to trade on a market. The question I wanted to answer was: how small could a prediction market be and still provide calibrated results?

What I found was that in markets with 16 or more traders, the results were calibrated. (Estimated probability = Observed probability) Additionally, events with a small probability of occurring were well calibrated. I also examined the behaviours that traders exhibited, and effects of manipulation.

These results were all written up in the article; please click here to contact me if you have any questions.

As I mentioned, I first ran these markets in the summer of 2006. I also ran these markets this past summer, and hope to publish the results soon.

** Peter Sorensen - University of Copenhagen **

Peter has been studying the academic aspects of prediction markets for some time, now. He has written papers with Marco Ottaviani, such as “Aggregation of Information and Beliefs in Prediction Markets.” (Marco was at the London Business School, but has since moved to Northwestern University in Chicago.)

Peter’s talk centered around the theory of prediction markets. He gave a good background of the general theory, and talked specifically about some aspects of the Favorite-Longshot bias. It was a good talk, and Peter clearly has done some interesting work in prediction markets.

** Gunther Fadler & Peter Gollowitsch - Pro:kons **

Gunther and Peter’s work in prediction markets stretches back to 1999! (Well before the “Wisdom of Crowds.”) Their original company ran from 1999 to 2002, and ran over 20 prediction markets. In 2002, the company was re-organised/re-structured as BDF-net. The new company’s focus was on prediction markets, consensus finding, and new media projects.

Their talk centered around a huge prediction market project they have been doing with SRG, the Swiss public broadcasting organisation. (Essentially the Swiss version of the BBC.) This was a large and complicated project that is currently on-going, revolving around news coverage of the 2007 Swiss elections.

The project is particularly complex, as they the prediction markets are served on seven different websites (for the different television/radio station website), and perhaps more importantly, there are four official languages in Switzerland! Additionally, Switzerland has a very unique political system, and the markets had to take those complexities into account.

Their solution is a master database, with “skins” for each individual website. So far they have 2000+ users, with 26,000 visitors per month. They are planning on integrating wikipedia, YouTube, GoogleMaps and other services into the solution, too.

Finally, congratulations to Pro:kons for winning the Cisco Austria Web 2.0 aware for social software! This shows that there is some very exciting prediction markets work being done that simply hasn’t made it to the forefront of the english-speaking community. It was great to hear about their work, and I believe we’ll be seeing more of them soon.

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Well, that’s it! It was a great conference, with a wide range of speakers from across the prediction market spectrum. As always, contact me with any questions or clarifications.