Research project in motion

I've discussed this briefly on the Prediction Markets Google Group, but I am currently conducting some primary research in small-scale prediction markets. Specifically, I'm looking to determine how accurate the results of prediction markets can be, and what behaviours cause these results.

To be specific, I am running prediction markets in a very niche sport: rowing. Why? Well, I'm on a tight timeframe and this fits in well with my interests and fits my timeframe available to complete my paper perfectly. I expect that some people may find fault in my methods since the markets are sports related, but I think I've minimised any distinction here. First, you'll be hard-pressed to find a bookmaker that publishes odds, unlike football, horse-racing, etc., so the same kind of widely published betting information doesn't exist. Second, the competitions are races so there aren't issues with teams fouling or otherwise interfering with each other. Third, there is near-zero media coverage outside of someone who participates in the sport.

Here are some of the issues I expect to address:
* How accurate are the groups predictions?
* How accurate are predictions relative to the number of traders in the market?
* What types of behaviours do traders exhibit?
* How do price manipulations affect small markets?
* How do behaviours influence the success of a market? How does this relate to the number of traders in a market?
* (potentially) How accurate are the groups predictions relative to expert predictions?

By the middle of July, I expect to have completed in excess of 60 individual markets, each with anywhere from 2 to 15 stocks. This should be sufficient data to make some interesting observations. Most stocks trade in the $0-$5 range, though a few get up to the $60-80 range.

I am doing this research with Inkling Markets. In my anecdotal working with amateur traders, I've found that most people are not fluent in trading techniques, and the user interface they have developed is one of the best I've seen. That, and the instant liquidty makes much more intuitive sense for novice traders.

This is the reason it has been quite some time since I've posted here; the project has taken up much more time than I anticipated! (And for that matter, continues to take up more time than I anticipated.) If anything, the only problem I have is that my marketing of these markets was perhaps a little too good, and I'm getting more people than I ever thought I would get participating. This result is still far better than the reverse, however.

I will publish preliminary results here as I compile them.

Cheers.