FEATURE10 May 2016

Finding the super-predictors

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Behavioural economics Features Impact UK

Techniques vary for asking people to make predictions and some individuals are more accurate than others, if only they can be identified, says Jon Puleston

Individual egg crop

Before you read this article, can I ask you to make a prediction: do you think it will rain in London next Wednesday?

The traditional approach to making predictions has been to ask a representative target group a question and aggregate the answers, relying on their views being reflective of the wider population. It can be costly and difficult to reach truly representative audiences and we have always faced difficulties dealing with what people say, and what they actually do, which can be quite different.

In the late 1990s, prediction market protocols gained attention as a more efficient means of making predictions. Based on the theory of the wisdom of the crowds – if you ask a group to forecast an outcome and their opinions are all independent and unbiased, the prediction errors of individuals should cancel themselves out, and what remains is the distillation of the knowledge.

This is far less reliant on a balanced ...