Prediction markets overestimated success on users’ personal goals

When people asked online traders to forecast their own futures, the crowd tended to put too much weight on a YES outcome, according to an analysis of prediction markets on Manifold.

What the study found

Zihan Chen, Lei Nico Zheng and Di Zhu examined 6,150 markets in which 1,660 users asked questions about their own futures, comparing them with markets about external events. In their arXiv preprint, the authors report that personal-future markets resolved YES 4.4 percentage points less often than their final prices implied; the corresponding gap for external-event markets was 0.9 points.

The authors say the overstatement was absent at opening but appeared within a day of trading, including in markets where the person concerned never traded. In the first day, observers moved personal-future prices 3.6 points further toward YES. Markets naming an outcome the person would not want were not overpriced.

Why it matters

The findings suggest that aggregating traders’ judgments does not necessarily produce well-calibrated forecasts about personal goals. The authors also report that the person concerned supplied 38% of the eventual price movement toward the outcome in personal-future markets, compared with 9% in external markets. A recalibration learned from earlier markets improved later forecasts by only 1.5%, according to the abstract.

Limits and unknowns

The abstract does not specify how the external comparison markets were selected, how outcomes were verified, or what metric was used for the reported forecast improvement. The observational results do not establish why traders were optimistic or whether the pattern applies beyond Manifold. The study is a preprint, not an established causal account.

Read the research

Authors: Zihan Chen, Lei Nico Zheng, Di Zhu

Published: 2026-10-29

Source basis: Based on the abstract only

Original abstract

People increasingly share personal goals online and invite others to forecast them. Research on the planning fallacy finds that observers predict a person's behavior less optimistically than the person does, and prediction markets aggregate such judgments, harnessing the wisdom of crowds. We study 6,150 prediction markets on Manifold in which 1,660 users asked about their own futures ("Will I ...?"), reconstruct every order and execution, and compare these self-markets with markets about external events. Self-markets resolved YES 4.4 percentage points less often than their final prices implied, whereas external markets were nearly calibrated (0.9 points); the difference was 2.2 points at the same price level and 1.9 points within creators who made both kinds of market. Absent when markets opened, the overstatement emerged within a day of trading, even where the person never traded, and peaked in the week before close. In a market's first day, observers moved external-market prices down toward the base rate, but moved self-market prices 3.6 points further toward YES, except in markets naming an outcome the person would not want, which were not overpriced. The correction came late and largely from the person, whose orders supplied 38% of the eventual movement toward the outcome in self-markets, against 9% in external markets. Because self-market prices mainly failed to separate successes from failures, a recalibration learned from earlier markets improved later forecasts by only 1.5%. Crowds believe in the futures people pose for themselves, and the information that would correct them lies with the person.

This article is an AI-generated adaptation, not a substitute for the original research. Preprints may not have been peer reviewed; AI can make mistakes.