Incentives Enhance Collective Intelligence: Prediction Markets Surpass Expert Performance

The Polymarket Phenomenon: Why Prediction Markets Are Surpassing Traditional Experts

Prediction markets are now outperforming conventional experts in predicting everything from election outcomes to company earnings, as platforms such as Polymarket and Kalshi become more popular. By allowing participants to place real-money bets, these markets pool scattered information, generating a "truth signal" that frequently updates more quickly than polls, analysts, or official announcements. For example,

several weeks before news organizations recognized the trend, highlighting how decentralized wagering can outpace institutional analysis.

This trend is moving beyond politics. In the business world, prediction markets are now used to bet on product releases, workforce reductions, and executive changes.

about Meta’s AI initiatives and Starbucks’ possible acquisition plans, with market participants adjusting odds in real time. This reflects a larger pattern: during the third quarter of 2025, a fivefold jump from the previous year’s figures. Kalshi and similar platforms, to provide event-based contracts, are helping to bring this trend into the mainstream.

However, regulatory attention is intensifying. The Commodity Futures Trading Commission (CFTC) is under pressure to clarify its regulatory stance on prediction markets, especially as they begin to overlap with areas traditionally governed by sports betting and financial derivatives. Michael Selig, nominated to lead the CFTC, will have to address these concerns during his confirmation,

— such as those related to government shutdowns or celebrity retirements — should be classified as "gaming" under the 1936 Commodity Exchange Act.

The expansion of prediction markets is also putting pressure on established institutions.

, with just 22% of Americans expressing trust that the federal government acts in their best interests. In contrast, prediction markets demand accountability: each wager links conviction to financial risk, encouraging accuracy instead of mere speculation. This approach has been likened to research from the Iowa Electronic Markets, expert predictions by synthesizing unbiased, up-to-the-minute data.

Leaders in various industries are now contending with these changes. Executives and board members are tracking probability shifts that occur hours before official reports are released, prompting a reassessment of how decisions are made. For instance,

or Taylor Swift canceling a tour are set by markets ahead of analyst commentary. This environment brings both uncertainty and new possibilities, as organizations adjust to a world where immediate market signals can outpace conventional strategies.

As prediction markets expand, their impact grows as well.

by 2035, fueled by its uses in economics, culture, and international affairs. Platforms like Polymarket and Kalshi are evolving into sophisticated forecasting tools, challenging the speed and scope of traditional systems. For decision-makers, the key is — all while navigating regulations that are still catching up to technological progress.