The cause for these rather philosophical considerations is my interest for prediction markets such as intrade, where you can effectively trade in all sorts of event probabilities. Literature has it that predictions produced using a bid/ask mechanism with real money will be of significantly better quality than survey forecasts for instance. Naturally, they cannot tell the future, but they will be more efficient at processing all currently available information than any one expert. Therefore, these markets serve two important purposes: If reasonably liquid, they offer high quality, quantified predictions of event probabilities of presidential elections or hurricane landfall severities, and they offer a hedging possibility, although the liquidity is definitely a limiting factor there at this point.
It is very timely that the CFA Institute has just published the results of its last Monthly Question survey about prediction markets. 65% of respondents think that such markets offer valuable information, and a majority of 54% think that they are fit for investment purposes (mostly hedging).
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