The idea that the median estimate of a group can be more accurate than individual expert estimates is called the 'wisdom of the crowd,' and dates back to the early 1900s.

Modern prediction markets—the platforms where people can trade bets that pay out depending on certain event outcomes—started in Iowa in 1988.

The 2024 US presidential election was a breakthrough moment for prediction markets

Founded in 2018 by MIT graduates, Kalshi won a federal appeals court ruling in October 2024 that allowed it to offer election contracts in the US. When prediction markets predicted President Donald Trump's win (more accurately than most polls), prediction markets were thrust into the public eye.

Prediction markets and sports betting are not forms of investing, despite how some fans portray them.

How George Gallup changed political polling forever

Straw polls had been used in the 19th century, but it wasn't until George Gallup's use of random sampling in 1936 that the art became a science.

Prediction markets—the platforms where users can trade bets that pay out depending on certain event outcomes—have faced questions about insider trading.

Prediction market Kalshi's CEO Tarek Mansour ​​has said that prediction markets are similar to the stock market—except instead of buying and selling shares of companies, users buy and sell "yes" or "no" on whether an event is going to happen or not.

Prediction markets help people bet on almost anything—which can be controversial

Critics point to incidents such as traders placing bets on the Venezuelan President Nicolás Maduro's capture and the two people in Israel who were charged on suspicion of using classified information to place bets about military actions.

The prices on prediction markets reflect how the collective forecasts future outcomes.

Personality tests, like Myers-Briggs Type Indicator, feel accurate because humans tend to accept generic descriptions of themselves that include flattering statements—a psychological phenomenon known as the Barnum effect.

Dow Theory laid the groundwork for modern market analysis

Developed by Charles Dow in the late 19th century, Dow Theory argued that markets move in trends. Its principles—confirmation, trends and volume—still influence technical analysis today.

Contract prices on prediction markets are generally interpreted as implied probabilities

For example, if a contract trading is at $0.65, that could be read as the market assigning a 65% probability to that event occurring. The most common format for prediction markets is winner-take-all: The contract settles at $1 if the event occurs, or $0 if it doesn't.

Kalshi is the first regulated prediction market in the US

Two migrant MIT students, Luana Lara Lopes and Tarek Mansour, shared an interest in hedging against uncertainty—from election outcomes to the Oscar awards. They fought hard for regulatory approval and their company now has a valuation in the billions. The platform has brought prediction markets into the mainstream.

The 'Lindy effect' is a theory that says the longer things that don't physically wear out (like ideas, brands, or institutions) have been around, the more likely they are to exist for longer.

Some experts equate prediction markets to the new crack cocaine of gambling addiction

An addiction psychiatrist at UCLA says betting apps are far more potent than traditional gambling, citing a 19-year-old patient who lost $180,000 and hadn't left campus in a year, cycling through sports bets, crypto, meme stocks, and prediction markets on his phone. This interview explores the extreme edge of the nascent industry.

Expert predictions on the metaverse

Experts are split about the likely evolution of a truly immersive metaverse. Many worry current online problems may be magnified if Web3 development is led by those who built today’s dominant web platforms.

Donald Trump's Truth Social social media platform is launching a prediction market

Named "Truth Predict," the cryptocurrency-based prediction market will allow users of the Truth Social social media platform to place crypto bets on the outcome of certain events (think: sports games, the economy, and political races). Truth Social is primarily owned by President Donald Trump and his family.

Prediction markets convinced regulators they're not gambling, but exchanging commodity futures contracts

Kalshi built a legal case that argues its yes/no bets on real-world events are futures contracts, and the relevant regulator—the Commodity Futures Trading Commission—agreed in 2020. Many states are now suing major prediction markets, arguing this legal case is faulty and obscures the true substance of the business: gambling.

How chaos helps explain why small market corrections can produce major economic instability

Oxford University complex systems professor Doyne Farmer discusses how predictions from many economic models are overly weighted toward simple relationships, such as supply and demand, and external shocks, such as the COVID-19 pandemic. However, real-world macroeconomic systems involve public and private actors interacting, producing feedback loops and cascading effects that resemble the oscillatory behavior seen in chaotic systems.

NFL Draft decisions are shaped by brain science, data, and office culture

Carnegie Mellon researchers say Draft-room choices are influenced by the "jackpot effect"—where higher stakes can impair performance—as well as by groupthink, the limits of data, and whether scouts feel safe speaking up.

The worst election polling fails in US history

Presidential pollsters in the US have had some embarrassing failures. Here’s a catalog of those miscalls, from the scholar who literally wrote the book on them.

Critics argue the Dow no longer reflects the modern economy

With only 30 companies and a price-weighted formula, skeptics say the DJIA underrepresents vast sectors of the market. They claim it is outdated, though its close correlation with the broader S&P 500 keeps it relevant.

AI expert shows the cyclical nature of AI hype—in 1988

Rodney Brooks wrote several decades ago about the boom and bust cycles of artificial intelligence. Starting from the 1950s excitement over ENIAC's multiplication through the second launch of then-novel neural networks, Brooks suggests AI progresses incrementally despite the hype.

Visualizing 11 cognitive biases that influence how you think

Humans are hardwired to make mental mistakes called cognitive biases, affecting the way we view our world. Among the most common are confirmation bias (seeking only evidence that affirms your views), authority bias (overweighting things said by authority figures), groupthink (assimilating ideas to avoid conflict), and more. This quick chart gives an overview of some of the most notable ways we mislead ourselves.

Smart pricing algorithms can unintentionally work together to raise prices

Researchers have found that, through trial and error, algorithms designed to adjust prices based on market data can learn to mimic price-fixing tactics, even without explicit programming to do so. Over time, they "learn" that it is more profitable to avoid price wars and keep prices high when competitors lower prices.

Here are some tips from Pew Research to help you distinguish between a good poll and an unreliable one.

How prediction markets differ from sportsbooks matters for regulation

There are a number of differences and similarities between sportsbooks and prediction markets, despite both allowing people to bet on outcomes for sports-related events. For instance, prediction markets typically earn revenue through transaction fees rather than taking directional exposure to outcomes.

The origin of chaos theory, colloquially known as the 'butterfly effect'

The theory explains that systems following well-understood physical laws can still produce unpredictable outcomes due to small variations in their initial conditions. Originally identified in weather data, elements of chaos have been observed in stock market fluctuations, cardiac arrhythmias, and the evolution of online social movements.

Chaos theory—informally known as the butterfly effect—is the reason why weather forecasts are presented with probabilities rather than certainties.

Despite being completely legal to discuss salaries with your coworkers, the practice largely remains taboo in the US, particularly amongst older workers.

Pay transparency—once considered taboo—is gaining momentum. Despite being legally protected since 1935, open salary discussions have only recently become more common, especially among younger workers. This overview explores how cultural norms, economic shifts, and new state laws are reshaping the conversation around what we earn.

Learn how natural systems exhibit characteristics of chaos theory

In biology, some mathematical models of ecosystem populations and heart irregularities show strong sensitivity to initial conditions, which scientists can simulate to determine quantitative tipping points at which these systems become unstable. Within the social sciences, crowd behavior and the virality of social media posts have shown how human behavior fits within the framework of chaos theory.

Prediction markets have their own lingo that's an amalgamation of Gen Z and Gen Alpha slang

For instance, if you've been out-maneuvered by another trader, you've been "mogged." A "rulescuck" is someone who is a stickler for betting market rules and may try to win on a technicality.

The Dow Jones Industrial Average vs. the S&P 500: Which one is a better representation of the economy?

The Dow and S&P 500 are both indexes meant to provide a broad representation of the economy. The Dow has 30 companies and is weighted by share price, while the S&P 500 has 500 different companies weighted by market capitalization. Since the indexes are so different, investors don't always agree on which index is a better representation of the economy—though the two move in the same direction more than 90% of the time.

Some experts and investors think short selling—a strategy in which investors bet that a stock will drop in value—helps keep the market healthy.

The CME FedWatch Tool predicts the likelihood of future rate changes

It's based on federal fund futures contract prices. At a Fed meeting in July 2024, for instance, Chair Jerome Powell once again decided not to lower rates, though he said cuts could be on the table in September.

David Ogilvy once worked for the man who created the Gallup Poll

In 1938, when Ogilvy came to the United States, he started working for George Gallup’s Audience Research Institute in New Jersey. He took his learnings with him through the rest of his career, including during World War II, when Ogilvy worked with the Intelligence Service at the British Embassy in Washington.