Predictions and Perceptions: Downloading Wisdom from Online Crowds

Prediction markets where people bet on everything from the likelihood that a movie will be a hit to the chance that a politician will become president to whether the stock market will go up or down are in vogue. But because prediction markets have to be managed they aren’t always the ideal way to get information. Wharton professors Albert Saiz and Uri Simonsohn have found a cheaper way to deliver some of the same benefits. It’s called an Internet search. The two professors argue in a new paper that the likelihood that a topic is discussed online in relation to a given location correlates with its relative prevalence in the real world.

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