How accurate are prediction markets for predicting outbreaks?
Prediction markets are reasonably calibrated for events with abundant trading and public information, but they have known limitations for novel disease outbreaks. Strengths: they aggregate diverse perspectives and update fast as new data arrives. Limitations for outbreaks: (1) thin liquidity in early outbreak markets — a few traders can move prices substantially. (2) Resolution risk — what counts as an 'official pandemic declaration' may itself be disputed. (3) Information asymmetry — health authorities have private data traders do not. (4) Reflexivity — when markets become news, they can influence the very thing they predict. The Polymarket 'Hantavirus pandemic 2026' market currently exceeds $3.5M in volume: enough liquidity to resist single-trader manipulation, but still volatile and sensitive to WHO statements.