Prediction Markets: Do They Improve Risk Management?

By Jon Schuler

What’s a prediction market good for?

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After introducing a prediction market to the USAF, we observe enhanced risk management practices on programs with self-generating risk identification and mitigation activity. We do not conclusively observe this effect on programs with stimulus-driven risk management processes. Ultimately, there was not enough data to evaluate whether prediction markets would foster earlier risk identification or faster closure of risks.