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Unpublished Paper
Prediction Markets to Forecast Electricity Demand
Working Paper, University of Maryland (2009)
  • Peter Cramton, University of Maryland
  • Luciano I de Castro, University of Illinois at Chicago

Forecasting electricity demand for future years is an essential step in resource planning. A common approach is for the system operator to predict future demand from the estimates of individual distribution companies. However, the predictions thus obtained may be of poor quality, since the reporting incentives are unclear. We propose a prediction market as a form of forecasting future demand for electricity. We describe how to implement a simple prediction market for continuous variables, using only contracts based on binary variables. We also discuss specific issues concerning the implementation of such a market.

Publication Date
August, 2009
Citation Information
Peter Cramton and Luciano I de Castro. "Prediction Markets to Forecast Electricity Demand" Working Paper, University of Maryland (2009)
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