The Hollywood Stock Exchange is probably one of the most famous prediction markets. It started in 1996 and is a fine example of the functionality of prediction markets software. In general, each players can buy or sell shares of a certain prediction, in this case the Hollywood Stock Exchange operates on film industry predictions. Depending on how many shares he buys or sells, he influences the price and also the final outcome of the prediction.

Prediction markets software is based on crowdsourcing. A study has shown that the forecasts given by prediction markets are often more accurate in comparison to traditional methods. But, one has to remember that prediction markets software will never fully replace the knowledge and experience of experts – they should be both used combined to get the best results.

The gamification and stimulation system of the prediction market software is the main reason why the predictions are so accurate. If participants buy the prediction-shares cheap and sell them at a higher, better price, they both make profit and, more importantly, cause the predictions to be more accurate. On the other hand, someone who loses game-money because he sells shares for a lower price, he loses credit and makes the quality of the prediction worse, resulting in a possible disqualification of the participant.