Information aggregation and manipulation in an experimental market

by: Robin Hanson, Ryan Oprea, David Porter

Journal of Economic Behavior & Organization, Vol. 60, No. 4. (August 2006), pp. 449-459.

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Abstract

Prediction markets are increasingly being considered as methods for gathering, summarizing and aggregating diffuse information by governments and businesses alike. Critics worry that these markets are susceptible to price manipulation by agents who wish to distort decision making. We study the effect of manipulators on an experimental market, and find that manipulators are unable to distort price accuracy. Subjects without manipulation incentives compensate for the bias in offers from manipulators by setting a different threshold at which they are willing to accept trades.

@article{citeulike:992548, abstract = {Prediction markets are increasingly being considered as methods for gathering, summarizing and aggregating diffuse information by governments and businesses alike. Critics worry that these markets are susceptible to price manipulation by agents who wish to distort decision making. We study the effect of manipulators on an experimental market, and find that manipulators are unable to distort price accuracy. Subjects without manipulation incentives compensate for the bias in offers from manipulators by setting a different threshold at which they are willing to accept trades.}, author = {Hanson, Robin and Oprea, Ryan and Porter, David }, citeulike-article-id = {992548}, doi = {http://dx.doi.org/10.1016/j.jebo.2004.09.011}, journal = {Journal of Economic Behavior \& Organization}, month = {August}, number = {4}, pages = {449--459}, posted-at = {2006-12-13 14:50:30}, priority = {2}, title = {Information aggregation and manipulation in an experimental market}, url = {http://dx.doi.org/10.1016/j.jebo.2004.09.011}, volume = {60}, year = {2006} }

RIS record

TY - JOUR ID - citeulike:992548 L3 - citeulike-article-id:992548 TI - Information aggregation and manipulation in an experimental market JF - Journal of Economic Behavior & Organization VL - 60 IS - 4 SP - 449 EP - 459 N2 - Prediction markets are increasingly being considered as methods for gathering, summarizing and aggregating diffuse information by governments and businesses alike. Critics worry that these markets are susceptible to price manipulation by agents who wish to distort decision making. We study the effect of manipulators on an experimental market, and find that manipulators are unable to distort price accuracy. Subjects without manipulation incentives compensate for the bias in offers from manipulators by setting a different threshold at which they are willing to accept trades. AU - Hanson, Robin AU - Oprea, Ryan AU - Porter, David PY - 2006/08// UR - http://dx.doi.org/10.1016/j.jebo.2004.09.011 ER -

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