Commodity Price Prediction using An Artificial Prediction ...

[Pages:24]Commodity Price Prediction using An Artificial Prediction Market based Approach

Rohith D. Vallam Ramasuri Narayanam Gyana R. Parija

July 18th, 2017

Agenda

Prediction Markets: Introduction Problem Definition Artificial Prediction Market: A Vanilla Version Results & Comparison Next Steps

2 India Research Lab

? 2016 IBM Corporation

How do people predict ?

Opinion Polls

Delphi methods

Peer Prediction Methods

Wagering mechanisms

Source of images :

3 India Research Lab

Prediction Markets (Our Focus)

? 2016 IBM Corporation

What is a Prediction Market?

Tool for collecting and aggregating opinion using market principles

Price: probability of event occurring

Iowa Electronic Markets: 2008 US Democratic Convention Market

Value: leading indicator, expose hidden information

Pay-off: monetary, reputational, indirect

Accuracy: better than conventional forecasting1

Clinton Obama

Image:

Defintion: A place where information is aggregated via market (or other) mechanisms for the primary purpose of forecasting events, or the probability that an event will occur

1Source: Arrow, K.J. et al "The Promise of Prediction Markets" Science, 2008, 320, 5878, 877-878

? 2017 IBM Corporation

Prediction Markets: Scientific Background

? 2017 IBM Corporation

When to use Prediction Markets?

Complexity (ecosystem) Uncertainty Many decision points Clear outcomes Market liquidity Diversity of opinion

? 2017 IBM Corporation

Advantages of Prediction Markets with Other Approaches of Information Aggregation

? 2017 IBM Corporation

Prediction Markets At Work: Consumer Prediction Markets

Hollywood Stock Exchange

Viral Loop (Prediction market mobile app)

Intrade Prediction Market

? 2017 IBM Corporation

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