Prediction Markets: A Study on the Taiwan Experience

Tung, Chen-Yuan, Tai, Chung-Ching, Chou, Tzu-Chuan, Wang, Shu G., Chie, Bin-Tzong and Chen, Shu-Heng (2011) Prediction Markets: A Study on the Taiwan Experience. In, Williams, Leighton Vaugham (ed.) Prediction Markets: Theory and Applications. Routledge, pp. 137-156. (doi:10.4324/9780203815526).

Abstract

Among all Asian countries, Taiwan is probably the first one to have her own prediction markets. From the early 2000s to the mid-2000s, three prediction markets were established one after the other in Taiwan. This happened a few years before the first political prediction market in Japan, General Election Hatena, which was established in 2005 by Hatena Co.,1 and the first prediction market in New Zealand, ipredict, which was established in 2008 by Victoria University of Wellington and the New Zealand Institute for the Study of Competition and Regulation (ISCR).2 In this section, we shall give a brief introduction to the Taiwan prediction markets, their history, operation, research and publications. The Taiwan Political Exchange (TAIPEX) was established in 2003 at the Institute of Physics, Academia Sinica in Taipei. Since then it has functioned several times to predict many important political events, including both the US and Taiwan presidential elections in 2004 (Wang et al., 2004, 2006, 2009).3 The AI-ECON Futures Exchange (AI-ECON FX) was established in 2006 at the AIECON Research Center, National Chengchi University in Taipei.4 It was established in an attempt to integrate agent-based computational economics and experimental economics as an initial step to further overarch computational social sciences with experimental social sciences (Chen and Tai, 2006; Barr et al., 2008). This project was sponsored by the National Science Council for three years from the middle of 2006 to the middle of 2009. AI-ECON FX has been applied to predict the opening day of the high speed railway in Taiwan. In November 2006 both TAIPEX and AI-ECON FX were run in parallel to predict the Taipei and Kaohsiung City mayoral elections (Chen and Wu, 2009).5

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Contributors

Author: Chung-Ching Tai

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