Prediction Markets for Defense Acquisition: The Devil is in the Details

摘要

Asset Value and Market Prices as Predictors * Two dimensions of value for any asset/contract: -- Arbitrage value: Potential financial benefit from reselling asset/contract at a higher price at a later date -- Intrinsic value: Expected financial benefit of holding the asset/contract indefinitely (or until market closes) * Many people think about the value of stocks in the stock market only in terms of the arbitrage value * Prediction markets provide reasonable predictions only when prices reflect estimate of intrinsic value * Thus, assets and markets must be designed to direct focus toward intrinsic value.