There has been controversy over the claim that prediction markets elicit ‘aggregate beliefs’, normally understood to mean the average of beliefs for the population. There is no debate over whether these markets generate good predictions, in the sense that they forecast outcomes well. Instead the debate has been over the additional claim that the prices in these markets recover the mean of aggregate beliefs. In other words, are the observed prices in these markets good estimates or predictors of aggregate beliefs?
According to the article, prediction markets cannot always be relied on to elicit any interesting statistic of aggregate beliefs. Formal derivations of the bets placed in prediction markets can be viewed as demands for state contingent commodities.
Prediction markets can be expected to do a good job recovering the average of aggregate beliefs under certain circumstances: unimodal distributions of beliefs, with no a priori reason to expect heterogeneity on either side of the market. Indeed, this environment might characterize many interesting settings, such as political elections or closed prediction markets in which there is minimal sample selection into the market (on the basis of beliefs, preferences and endowments). But the result is not general, and it is easy to construct examples in which prediction markets do a predictably poor job of recovering average beliefs.
Fountain, John, and Glenn W. Harrison. 2011. "What do prediction markets predict?." Applied Economics Letters 18, no. 3: 267-272. Business Source Complete, EBSCOhost (accessed September 18, 2015).
While I would concur to a cursory extent that the effect that prediction markets would assist with initial predictions, it is imperative to account for the nature of constantly changing variables in this market. In other words, though they would help to create initial models used to create plans, there needs to be a degree of fluidity in the plan built in to account for adaptations said market.