Contingency market
Encyclopedia
Contingency markets are markets where contract
s are made to exchange funds contingent upon an event or combination of events or contingencies thereof.
s are a subset of contingency markets and specialise in independent future events and are often exploited for the predictive side effect they produce. Complex contingencies only tend to occur in the gambling
industry's implementations of prediction markets.
Unlike prediction markets, contingency markets also support dependent future events. These are a priori directly influenced or controlled by those interested in a particular outcome of an event.
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
s are made to exchange funds contingent upon an event or combination of events or contingencies thereof.
Difference from prediction markets
Prediction marketPrediction market
Prediction markets are speculative markets created for the purpose of making predictions...
s are a subset of contingency markets and specialise in independent future events and are often exploited for the predictive side effect they produce. Complex contingencies only tend to occur in the gambling
Gambling
Gambling is the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods...
industry's implementations of prediction markets.
Unlike prediction markets, contingency markets also support dependent future events. These are a priori directly influenced or controlled by those interested in a particular outcome of an event.
External links
- www.contingencymarket.com a web service, currently in development, intended to provide a trading system enabling financial exchanges contingent upon public events.
See also
- InsuranceInsuranceIn law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
- Threshold pledge
- Assurance contractsAssurance contractsAn assurance contract, also known as a provision point mechanism, is a game theoretic mechanism and a financial technology that facilitates the voluntary creation of public goods and club goods in the face of the free rider problem....
- Betting exchangeBetting exchangeA betting exchange is an entity which provides "trading" facilities for retail or bookmaker customers to buy and sell contracts. Contracts are structured as binary options. Some betting exchanges may also offer CFD products...
- Preorder EconomyPreorder EconomyA preorder economy is a type of proposed future economy where the exact demand for goods is known ahead of time, before any material production takes place...