The Wisdom of the Market: Using Human Factors to Design Prediction Markets for Collective Intelligence

Abstract

There is an ever-growing literature on the power of prediction markets to harness “the wisdom of the crowd” from large groups of people. However, traditional prediction markets are not designed in a human-centered way, often restricting their own potential. This creates the opportunity to implement a cognitive science perspective on how to enhance the collective intelligence of the participants. Thus, we propose a new model for prediction markets that integrates human factors, cognitive science, game theory and machine learning to maximize collective intelligence. We do this by first identifying the connections between prediction markets and collective intelligence, to then use human factors techniques to analyze our design, culminating in the practical ways with which our design enables artificial intelligence to complement human intelligence.