A research work by George Tziralis & Panos Ipeirotis. Detecting Important Events using Prediction Markets, Text Mining, and Volatility Modeling. Presented on July 9th in the 3rd Prediction Markets workshop, Kellog's School of Management, Northwestern University, Chicago

1. Detecting Important Events
using Prediction Markets, Text
Mining, and Volatility Modeling
George Tziralis Panos Ipeirotis

2. markets and efficiency
• strong: prices reflect all information, public and
private
• semi-strong: prices reflect all publicly available
information
• weak: past prices cannot be used for market
prediction

3. prediction markets?
• Perhaps, the relationship between price and
information is no more clear than in prediction
markets (Pennock et al. 2002)
• let’s start from the weak form of efficiency
• is it possible to predict future prices using only
past ones?

4. playground
• InTrade
• political contracts
• US nominee elections 08
• 800 - 1000 time series instances for each
contract