Say you want to know how many Tesla cars will be sold next year. You can make a prediction market on this question and let people trade based on the outcome. One way is to pick a likely value (say 400 thousand) and ask for the probability the outcome will be higher than this, creating a "boolean" prediction market. Another way is to simply ask for the expected value, creating an "index" prediction market. I propose a third approach which asks for the full CDF of outcomes.
Ordered Prediction Markets
Say you want to know how many Tesla cars will be sold next year. You can make a prediction market on this question and let people trade based on the outcome. One way is to pick a likely value (say 400 thousand) and ask for the probability the outcome will be higher than this, creating a "boolean" prediction market. Another way is to simply ask for the expected value, creating an "index" prediction market. I propose a third approach which asks for the full CDF of outcomes.