Core Insights - Kalshi's new research division claims its prediction market platform can predict inflation rates more accurately than Wall Street consensus forecasts, achieving an accuracy rate of 85% in short-term forecasts made one week ahead of official releases [2] - The company asserts that its forecasts are 40% more accurate overall compared to traditional forecasts, based on mean absolute error [2] - Kalshi identified "shock alpha" periods where its forecasts had 50% lower forecast error than traditional estimates, indicating potential advantages in specific market conditions [3] Prediction Market Accuracy - Advocates for prediction markets argue that collective intelligence can outperform expert predictions, yet independent research presents a more nuanced view of their accuracy [4][7] - A study of nearly 2,500 political prediction markets during the 2024 U.S. presidential election found accuracy rates of 78% for Kalshi and 67% for Polymarket, with well-defined events yielding better results than speculative contracts [5] Market Inefficiencies - The accuracy of prediction markets is hindered by inefficiencies, as evidenced by speculative behavior, momentum trading, and partisan bets affecting market prices [6] - Significant price divergences between equivalent contracts on different platforms suggest that the market making and arbitrage processes necessary for aligning forecasts with public opinion are still developing [8]