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Kalshi: Market Prediction Outperforms Wall Street Consensus Expectation on Inflation Prediction
BlockBeats News, December 22nd, according to Coindesk, a study by the prediction market platform Kalshi found that prediction markets outperformed Wall Street consensus expectations in inflation prediction. Over a 25-month period, the average error of prediction markets was 40% lower than consensus forecasts.
The study points out that the advantage of prediction markets lies in their aggregation of diverse information from traders based on economic incentives, forming a "wisdom of the crowd" effect, allowing them to respond more sensitively to changing environments. These findings suggest that market-based predictions can be a valuable complementary tool for institutional decision-makers, especially in times of high uncertainty.
By comparing inflation predictions on its platform with Wall Street consensus expectations, Kalshi found that market-based traders, over a 25-month observation period, were more accurate than traditional economists and analysts, with this advantage being particularly significant during economic fluctuations. Specifically, the study found that from February 2023 to mid-2025, the prediction markets' estimates of the year-over-year change in the Consumer Price Index (CPI) had an average error 40% lower than consensus forecasts. When there were significant divergences between actual data and expectations, the advantage of prediction markets became even more pronounced, with their accuracy exceeding consensus expectations by up to 67%.
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