Nonprofit prediction markets: Betting your way to a better world

If you haven't gotten involved in a prediction market yet, this is going to blow your mind...

Essentially, prediction markets are based on the idea that large groups are better than individuals when it comes to determining unknown variables or predicting the possibility of an event. Whether the question is the weight of a pig, the release date on a piece of software, or the identity of the next President, prediction markets, in all likelihood, will be better at "guessing" the outcome than any single individual.

Although they have been around for decades, prediction markets have become really popular over the last few years, due in large part to James Surowiecki's 2004 book, The Wisdom of Crowds, which offered a very detailed historical analysis of both the strengths and weaknesses of these markets. When it came out, Suroweicki's book had a revolutionary effect, changing the way that people looked at everything from elections to how people in crowds react to each other. The repercussions of his research are still playing out.