Question

A prediction market involves:

Select one:
a. leveraging customers to virally promote a firm's products or services.
b. aggregating the opinions of a specialized group of experts who analyze a problem and suggest solutions.
c. making calculated estimates on the prices of goods and services based on the speculation of a group of experts.
d. polling a diverse crowd and aggregating opinions to form a forecast of an eventual outcome.
e. trading on essential goods and services with a view of making a profit by hiking prices at a time of high demand.

Answer 1

A prediction market involves aggregating diverse opinions to forecast outcomes. This is particularly relevant in finance, where stock predictions are based on future expectations. Option 'd' accurately describes a prediction market.

Step-by-step explanation:

A prediction market involves polling a diverse crowd and aggregating opinions to form a forecast of an eventual outcome. This approach is used in various fields, including politics where campaigns may predict voter turnout based on demographic factors, and in financial markets where stock prices are influenced by expectations about future performance rather than current profits. Economists and analysts often rely on prediction markets to make calculated estimates about stock prices, considering the shifts in expectations that are reflected in these prices.

The correct option that defines a prediction market is. polling a diverse crowd and aggregating opinions to form a forecast of an eventual outcome.' This method aggregates the collective intelligence and speculations of a wide and varied group of people, which can often lead to surprisingly accurate predictions about future events, whether it be election outcomes, market trends, or other future developments.