Abigail Donahue
Major: Economics
Research Location: Berkeley, CA
Abigail gave a paper at the Manifold Market Conference in Berkeley, CA on evaluating how well the “wisdom of the crowds” theory holds up in online prediction markets. After reading about prediction markets and this conference in a New York Times article, Abigail began to research this topic with the assistance of her advisor. Prediction markets are like stock markets, except traders buy shares of “yes” or “no” in interesting and relevant questions, like: will the University of Kentucky win March Madness? Will Travis Kelce propose to Taylor Swift at the Super Bowl? Will Kate Middleton’s announcement today be that she has cancer? This interesting online space is growing at a rapid pace, and (if economically sound) has the potential to make a positive impact on our world in a multitude of ways. But, in order for these prediction markets to be economically viable, they must adhere to standard economic principles, like the wisdom of the crowds. At the urging of her supervisor, Abigail had reached out to the conveners of the Manifold who then invited her to give a talk at their conference on her research.
Abigail says, "The prediction markets community is very small, and there are some characters. The most challenging experience was definitely getting over my nerves when going into my presentation. The most surprising outcome was how well the presentations went and how willing people were to sit outside the conference center with me and chat about statistics. I came to this conference to learn from experts why I am getting the weird results I am getting and through many conversations with 'super-traders' I was able to learn about the different frictions in the system that lead to unexpected outcomes."