Prediction markets are an effective tool for gathering and analyzing the thoughts of a group of people on an issue. The larger the population making predictions or casting votes, the more accurate the market can become. Prediction markets are gaining acceptance as businesses identify new uses to experiment with them. However, prediction markets are not very effective with limited response as a few outliers could skew a prediction significantly. So how can a company create an incentive for users to participate in their prediction market without paying users for their input?
A simple approach is to create a status feature. At a basic level, people value how others perceive them. They are motivated to be named an expert or recognized as knowledgeable. When users participate in multiple prediction markets, a company can track the individual’s response against the actual outcome overtime. If the user has a strong history of accurately predicting political outcomes, the company could name them a political expert. Or if a user regularly picks the outcome of professional hockey games, they could be named an NHL guru. The company could then weight that user’s future opinions more heavily as they have an established track record of being accurate. This motivates the user to continue to participate and provide quality responses.