Chris Masse maintains the most complete website on prediction markets. He has slowly evolved his views on the utility and function of such markets.
He recently noted:
The reality check is that the social utility of the prediction markets is marginal. The added accuracy is minute, and, anyway, doesn’t fill up the gap betwteen expectations and omni-science (which is how people judge forecasters).
In our view, the social utility of the prediction markets lays in efficiency, not in accuracy. In complicated situations, the prediction markets integrate facts and expertise much faster than the mass media do. It is their velocity that we should put to work.
Nice quote, Chris!
The truth about prediction markets
Chris F. Masse
Midas Oracle .ORG, February 14th, 2009