A prediction market is a market where:

Question

Quizplus · Accepted Answer

A prediction market involves participants buying and selling contracts that pay off based on the outcome of a future event. The payoffs are directly linked to the occurrence of the uncertain event, therefore making option C the correct answer. Option A may be a characteristic of a prediction market, but it is not the defining feature. Option B refers to the concept of information asymmetry, which is not necessarily related to prediction markets. Option D is an incorrect statement as prediction markets rely on information to make predictions.

A Prediction Market Is a Market Where