Prediction markets have emerged fairly recently as a promising forecasting mechanism to handle efficiently the dynamic aggregation of dispersed information among various agents. The interest that this mechanism attracts seems to be increasing at a steady rate, in terms of both business interest...

This paper devises a methodology to compare the accuracy of prediction markets and polls. The data of the Exchange of Future Events (xFuture) for Taiwan’s 2006 mayoral elections and 2008 presidential election show that the prediction markets outperform the opinion polls in various indices of...