Prediction market platform donated to LU
This enables researchers to host expert prediction markets for climate-risk outcomes.
Dr Kim Kaivanto, Senior Lecturer in Economics at Lancaster University Management School, co-organised a workshop at Woburn House, London, earlier this year, bringing industry and academic figures together to discuss the problems involved in the current provision of climate-risk information, and the ways in which prediction markets can help overcome those problems.
He said: “We are extremely pleased to be carrying forward this initiative to run expert prediction markets for climate risk outcomes. To make sense of emissions scenarios and to support planning and decision-making, both public and private sector organisations have a pressing need for this type of forward-looking expert risk information.”
Hivemind was spun out of UK research-based investment manager Winton Group in 2018. Winton, which remains a majority shareholder of Hivemind, created the original version of the AGORA prediction market platform, which Hivemind further developed and tested. Hivemind’s other shareholders include Fidelity International Strategic Ventures, and Barclays.
Hivemind’s shareholders are donating the IP and codebase for AGORA to Lancaster University for a joint initiative with Exeter University to use prediction markets for forecasting longer-range climate risks, and even as an efficient mechanism for performance-driven allocation of funding for applied climate research.
AGORA has previously been used to run prediction markets for seasonal temperatures and rainfall, El Niño events, hurricane activity, and crop yields. Experts from academia and the private sector took part in these markets, which generated probability forecasts that synthesised their knowledge and evolved as new information became available.
Prediction markets have characteristics which are useful for long-range climate-risk forecasting. They incentivise and reward participants with distinct expertise and information to come forward. They also provide a level playing field for experts from different — yet complementary — fields of expertise.
Understanding emissions pathways requires diverse and complementary expertise from political science, economics and policy, as well as country-specific knowledge for the largest emitters.
The AGORA Prediction Market platform can integrate this expertise with that of climate scientists, whose models are conditioned on emissions scenarios. Also, as the markets are being run to generate information as a public good, rather than for private profit, the incentives to skew evaluations to suit any one organisation are mitigated.
Mark Roulston, who oversaw the development of AGORA and is now working on the climate initiative, said: “The prediction market approach should interest governments, companies and philanthropists who want to fund climate research from diverse sources in an efficient and performance-driven way.”
Winton Group (“Winton”) is a research-based investment management company with a specialist focus on statistical and mathematical inference in financial markets. The firm’s quantitative investment strategies are implemented systematically across thousands of securities, spanning the world’s major liquid asset classes. Founded by David Harding in 1997, Winton manages assets on behalf some of the world’s largest institutional investors. For more information, please visit www.winton.com.
About Fidelity International:
Fidelity International offers investment solutions and services and retirement expertise to more than 2.5 million customers globally. As a privately held, purpose-driven company with a 50-year heritage, they think generationally and invest for the long term. Operating in more than 25 countries and with $767.6 billion in total assets, their clients range from central banks, sovereign wealth funds, large corporates, financial institutions, insurers and wealth managers, to private individuals.
Their Workplace & Personal Financial Health business provides individuals, advisers and employers with access to world-class investment choices, third-party solutions, administration services and pension guidance. Together with their Investment Solutions & Services business, they invest $574.9 billion on behalf of their clients. By combining their asset management expertise with their solutions for workplace and personal investing, they work together to build better financial futures. Data as of 31 March 2022. Read more at www.fidelityinternational.com
Barclays is a British universal bank. They are diversified by business, by different types of customer and client, and geography. Their businesses include consumer banking and payments operations around the world, as well as a top-tier, full service, global corporate and investment bank, all of which are supported by their service company which provides technology, operations and functional services across the Group.
This article originally appeared as Lancaster University obtains new climate prediction markets platform