Testing the effectiveness of Semi - Predictive Markets: Are fight fans smarter than expert bookies?

Crowd wisdom has manifested itself in several successful business applications, most notably predictive markets. Notwithstanding there have been few objective long term measures of its underlying principles, something this study aimed to rectify. through the mechanism of predictive sports markets on the basis of fan (i.e., the crowd) prediction participation of UFC fight outcomes as compared to the fight outcome predications made by bookmakers (i.e., the experts). For the purpose of this study, we obtained the results of predictions from both bookies and fans for three years of Pay-Per-View events. We found that 85.7% of event outcomes were accurately predicted by the crowds (fans), compared to only 67.6% by the experts (bookies). Our prima facia results suggest that crowds can provide more accurate predictions than bookies on a binary level (Win – Loss). However, the scope of this study was limited by access to primary UFC fan voting data and the smallness of the data set.