Elements of information theory
Elements of information theory
Prediction Markets as Decision Support Systems
Information Systems Frontiers
Combinatorial Information Market Design
Information Systems Frontiers
Information incorporation in online in-Game sports betting markets
Proceedings of the 4th ACM conference on Electronic commerce
A dynamic pari-mutuel market for hedging, wagering, and information aggregation
EC '04 Proceedings of the 5th ACM conference on Electronic commerce
Computer
Self-financed wagering mechanisms for forecasting
Proceedings of the 9th ACM conference on Electronic commerce
Complexity of combinatorial market makers
Proceedings of the 9th ACM conference on Electronic commerce
Non-myopic strategies in prediction markets
Proceedings of the 9th ACM conference on Electronic commerce
Strategies in Dynamic Pari-Mutual Markets
WINE '08 Proceedings of the 4th International Workshop on Internet and Network Economics
Prediction Mechanisms That Do Not Incentivize Undesirable Actions
WINE '09 Proceedings of the 5th International Workshop on Internet and Network Economics
Gaming Dynamic Parimutuel Markets
WINE '09 Proceedings of the 5th International Workshop on Internet and Network Economics
Composition of markets with conflicting incentives
Proceedings of the 11th ACM conference on Electronic commerce
Information aggregation in smooth markets
Proceedings of the 11th ACM conference on Electronic commerce
Decision rules and decision markets
Proceedings of the 9th International Conference on Autonomous Agents and Multiagent Systems: volume 1 - Volume 1
When do markets with simple agents fail?
Proceedings of the 9th International Conference on Autonomous Agents and Multiagent Systems: volume 1 - Volume 1
Rational market making with probabilistic knowledge
Proceedings of the 11th International Conference on Autonomous Agents and Multiagent Systems - Volume 2
Task routing for prediction tasks
Proceedings of the 11th International Conference on Autonomous Agents and Multiagent Systems - Volume 2
What you jointly know determines how you act: strategic interactions in prediction markets
Proceedings of the fourteenth ACM conference on Electronic commerce
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We study the equilibrium behavior of informed traders interacting with two types of automated market makers: market scoring rules (MSR) and dynamic parimutuel markets (DPM). Although both MSR and DPM subsidize trade to encourage information aggregation, and MSR is myopically incentive compatible, neither mechanism is incentive compatible in general. That is, there exist circumstances when traders can benefit by either hiding information (reticence) or lying about information (bluffing). We examine what information structures lead to straightforward play by traders, meaning that traders reveal all of their information truthfully as soon as they are able. Specifically, we analyze the behavior of risk-neutral traders with incomplete information playing in a finite-period dynamic game. We employ two different information structures for the logarithmic market scoring rule (LMSR): conditionally independent signals and conditionally dependent signals. When signals of traders are independent conditional on the state of the world, truthful betting is a Perfect Bayesian Equilibrium (PBE) for LMSR. However, when signals are conditionally dependent, there exist joint probability distributions on signals such that at a PBE in LMSR traders have an incentive to bet against their own information--strategically misleading other traders in order to later profit by correcting their errors. In DPM, we show that when traders anticipate sufficiently better-informed traders entering the market in the future, they have incentive to partially withhold their information by moving the market probability only partway toward their beliefs, or in some cases not participating in the market at all.