Bluffing and strategic reticence in prediction markets

Yiling Chen, Daniel M. Reeves, David M. Pennock, Robin D. Hanson, Lance Fortnow, Rica Gonen

نتاج البحث: فصل من :كتاب / تقرير / مؤتمرمنشور من مؤتمرمراجعة النظراء


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.

اللغة الأصليةالإنجليزيّة
عنوان منشور المضيفInternet and Network Economics - Third International Workshop, WINE 2007, Proceedings
ناشرSpringer Verlag
عدد الصفحات12
رقم المعيار الدولي للكتب (المطبوع)9783540771043
المعرِّفات الرقمية للأشياء
حالة النشرنُشِر - 2007
منشور خارجيًانعم
الحدث3rd International Workshop on Internet and Network Economics, WINE 2007 - San Diego, CA, الولايات المتّحدة
المدة: ١٢ ديسمبر ٢٠٠٧١٤ ديسمبر ٢٠٠٧

سلسلة المنشورات

الاسمLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
مستوى الصوت4858 LNCS
رقم المعيار الدولي للدوريات (المطبوع)0302-9743
رقم المعيار الدولي للدوريات (الإلكتروني)1611-3349


!!Conference3rd International Workshop on Internet and Network Economics, WINE 2007
الدولة/الإقليمالولايات المتّحدة
المدينةSan Diego, CA


أدرس بدقة موضوعات البحث “Bluffing and strategic reticence in prediction markets'. فهما يشكلان معًا بصمة فريدة.

قم بذكر هذا