.jpg)
Futuur launched today a set of prediction markets forecasting the results of each and every race in Brazil’s presidential, gubernatorial, and senate elections, which are scheduled to take place in October. The forecasts are the result of a wisdom-of-the-crowd-based operation that gathers information from its user base in the form of trades and turns it into probabilities of occurrence for each possible outcome in a market.
It’s the first time a company offers this kind of coverage of the Brazilian elections, which have progressively attracted more international attention for a host of reasons, including the country’s environmental policies, the return of former President Lula to the ballot, and rumors of a possible coup or insurrection as the country’s polarized political landscape presents similarities to the US on the eve of the 2020 elections.
To reflect this complex scenario, Futuur opened prediction markets on all 27 gubernatorial races, 27 Senate seats, and the presidency, as well as markets on related subjects such as:
-
Whether or not there will be a second round of voting in the presidential election
-
Whether candidates will show up on debates before the first round of voting
Conditional Markets
Another significant addition to the platform's coverage of the elections is the inclusion of so-called conditional markets, which measure traders’ expectations regarding the potential impact of a given outcome on a specific indicator or metric. It is, for example, possible to measure confidence in a candidate’s proposed policy program, by comparing the odds in markets such as “If Lula is elected, what will be Brazil’s unemployment rate at the end of 2023?” and “If Bolsonaro is elected, what will be Brazil’s unemployment rate at the end of 2023?”. The indicators currently available include inflation, unemployment, and GDP.
In the same way that normal prediction markets aggregate information about the likelihood of a given outcome occurring, conditional markets do so on an “if, then” basis, allowing the market to provide insight on the potential results of decisions (such as elections) before they’ve been made. Markets based on the condition which did not occur are canceled, with funds returned to traders. Markets where the condition does occur are resolved in the normal course, with traders being rewarded for their accurate predictions.
“We’re excited to be expanding into conditional markets, which can offer a more nuanced set of predictions, and are a natural extension of our goal of facilitating decision-making through more accurate forecasts about the critical issues of the day” said Tom Bennett, Futuur’s founder and CEO.
How Prediction Markets Work
As opposed to methods like polling, in which respondents are asked who they intend to vote for, predictions on Futuur are made in the form of wagers, with punters betting on the outcome’s likelihood to occur. For a given market -- for instance, “Who will be elected President of Brazil in 2022?" -- each potential outcome has a price, which ranges from 0 to 1, and represents the percentage chance that the outcome happens, according to the community of forecasters. If the predicted outcome does occur, the forecaster will win 1 unit of the currency for each share purchased, while those predicting other outcomes will lose their stakes. As the crowd makes its predictions by buying and selling positions, the price changes accordingly -- the more people wager on an outcome, the higher its price, and, by extension, its probability of occurrence.
The result is an ongoing, up-to-date forecast that aggregates information from across diverse perspectives, and accounts for changing information over time. Futuur makes these predictions easy to browse and interpret, by providing a single number as a percentage estimate of an outcome’s likelihood to occur.
Across numerous academic studies, prediction markets have consistently been shown to generate results that are at least as accurate as alternative methods of forecasting such as polls, expert surveys, or algorithmic approaches.
