Using Prediction Market Data to Illustrate Undergraduate Probability

Author: Aldous David J.  

Publisher: Mathematical Association of America

ISSN: 1930-0972

Source: American Mathematical Monthly, Vol.120, Iss.7, 2013-08, pp. : 583-593

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Abstract

Prediction markets provide a rare setting, where results of mathematical probability theory can be related to events of real-world interest and where theory can be compared to data. The paper discusses two simple mathematical results-the halftime price principle and the serious candidates principle-and corresponding data from baseball and the 2012 Republican Presidential nomination race.