While relatively new to market research, Prediction Markets have been used since 1988 by the University of Iowa to predict elections and, more recently a number of well known companies, including Hewlett-Packard, Motorola, Intel, Best Buy and Microsoft, have used Prediction Markets internally to predict sales figures and volumetrics and identify best-selling products. Results in all cases have been as good as, if not more accurate than, other methods.

Briefly, Prediction Markets is a platform that collects and aggregates the knowledge and judgment of a random, diverse group around a specific event or concept for the purpose of making predictions. Based on the “wisdom of crowds,” as developed by James Surowiecki, author of “Wisdom of Crowds,” Prediction Markets confirm the concept that “large groups of people are smarter than an elite few, no matter how brilliant — better at solving problems, fostering innovation, coming to wise decisions, even predicting the future.”

A significant body of research has been conducted that compares Prediction Market outcomes and more traditional quantitative methods. An article appearing in the May 2013 issue of Quirk’s magazine noted comparative studies where results in the two approaches were almost identical.