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MANSCI
2010

Prediction Markets: Alternative Mechanisms for Complex Environments with Few Traders

13 years 2 months ago
Prediction Markets: Alternative Mechanisms for Complex Environments with Few Traders
Double auction prediction markets have proven successful in large-scale applications such as elections and sporting events. Consequently, several large corporations have adopted these markets for smaller-scale internal applications where information may be complex and the number of traders small. Using laboratory experiments we test the performance of the double auction in complex environments with few traders and compare it to three alternative mechanisms. When information is complex we find that an iterated poll (or Delphi method) out-performs the double auction mechanism. We present five behavioral observations that may explain why the poll performs better in these settings. JEL: C72, C91, D82
Paul J. Healy, Sera Linardi, J. Richard Lowery, Jo
Added 29 Jan 2011
Updated 29 Jan 2011
Type Journal
Year 2010
Where MANSCI
Authors Paul J. Healy, Sera Linardi, J. Richard Lowery, John O. Ledyard
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