Why does the influenza market work?
The prediction market works because each of these traders has access to unique information regarding current and future influenza activity. For example, if Dr. X, a microbiologist working in a state public health laboratory and a trader in the seasonal influenza market, notices a sudden increase in the number of respiratory cultures positive for influenza, he has an indication that his community will likely see an increased number of new influenza cases. Armed with this new information, Dr. X would log-on to the influenza market Web site and purchase shares for “widespread influenza activity” over the next few weeks. At the same time, he would also likely try to sell her shares of “little-or-no influenza activity.” Or if Ms. Y, an emergency room nurse and an influenza market trader, saw several patients with influenza symptoms in the last couple of weeks but many fewer this week, she would be tempted to sell all her “widespread influenza activity” shares and try to buy as many “little-
