Bluffing and strategic reticence in prediction markets

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

פרסום מחקרי: פרק בספר / בדוח / בכנספרסום בספר כנסביקורת עמיתים


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.

שפה מקוריתאנגלית
כותר פרסום המארחInternet and Network Economics - Third International Workshop, WINE 2007, Proceedings
מוציא לאורSpringer Verlag
מספר עמודים12
מסת"ב (מודפס)9783540771043
מזהי עצם דיגיטלי (DOIs)
סטטוס פרסוםפורסם - 2007
פורסם באופן חיצוניכן
אירוע3rd International Workshop on Internet and Network Economics, WINE 2007 - San Diego, CA, ארצות הברית
משך הזמן: 12 דצמ׳ 200714 דצמ׳ 2007

סדרות פרסומים

שםLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
כרך4858 LNCS
ISSN (מודפס)0302-9743
ISSN (אלקטרוני)1611-3349


כנס3rd International Workshop on Internet and Network Economics, WINE 2007
מדינה/אזורארצות הברית
עירSan Diego, CA

טביעת אצבע

להלן מוצגים תחומי המחקר של הפרסום 'Bluffing and strategic reticence in prediction markets'. יחד הם יוצרים טביעת אצבע ייחודית.

פורמט ציטוט ביבליוגרפי