Can Prediction Markets be a Learning Tool?
May 13, 2011 Leave a comment
Ah, prediction markets. Nothing is better for convincing yourself you know exactly what will happen in every upcoming election. According to a new paper in Computers & Education, prediction markets may also be useful in classrooms. The basic idea is that prediction markets improve cognitive skills and increase student engagement by requiring new knowledge to be applied to the decision making process.
To test their hypotheses the authors used a prediction market called the “Insurance Loss Market” that was specifically designed for an undergraduate rick management class. Students were required to collect and analyze data in order to make weekly bets on property losses in various states. So, how did it work?
Our exploratory research has demonstrated that learners’ decision making in a specific problem domain has improved over the module. We have identified trading behaviours that demonstrate learners will integrate new information into their cognitive framework and alter their decisions based upon this new information. This is a clear indication of active engagement by learners. Finally, we have demonstrated that learners are actively searching for relevant information that is not supplied to them in lectures and are integrating this information into their decision making processes.
There’s more good news. The class also counts as credit toward the school’s new “legitimized gambling” major.