How accurate are forecasts on geopolitical events from human collectives? Evidence from a real-money prediction market

Abstract

Accurate forecasts of geopolitical events are essential for security, foreign, and macroeconomic policy. Among human-based forecasting methods, predictions of collectives have established themselves as particularly accurate and useful. In particular, prediction polls and prediction markets have become well-studied and established methodologies. This article evaluates the discrimination and calibration of a prediction market on geopolitical events conducted in 2023 and 2024. It makes two contributions to the literature. First, it is the first article to provide evidence of the forecasting accuracy of a real-money prediction market on geopolitical events. Second, it provides one of the first comparisons of a prediction market’s forecasting accuracy with those of prediction polls for geopolitical events. This way, it contributes to a still small but growing literature that tries to establish the conditions under which prediction polls or prediction markets generate more accurate forecasts.