Gaming prediction markets: equilibrium strategies with a market maker
type: Item
instance of: scholarly article
title: Gaming prediction markets: equilibrium strategies with a market maker
zbMATH Open document ID: 1200.91120
author: Yiling Chen
author: Stanko Dimitrov
author: Rahul Sami
author: Daniel M. Reeves
author: David M. Pennock
author: Robin D. Hanson
author: Rica Gonen
author: Lance Fortnow
published in: Algorithmica
publication date: 2010-11-08T00:00:00Z
full work available at URL: urn-3:HUL.InstRepos:5027877
review text: The paper is oriented to strategic behavior of risk-neutral and incompletely informed traders in a prediction market. The attention is focused on the interaction between traders and logarithmic market scoring rule in a Bayesian extensine-form game with incomplete information, where finite-stage and infinite-stage game models are considered separately. The main results show that different information structures can lead to radically different strategic properties. Namely, in the case of conditionally independent signals, the truthful betting is the unique perfect Bayesian equilibrium, meanwhile if the signals are unconditionally independent, the perfect Bayesian equilibrium need not (in the case of infinite-stage model, it cannot) exist in such a game.
reviewed by: Milan Mareš
Mathematics Subject Classification ID: 91B26
Mathematics Subject Classification ID: 91A10
Mathematics Subject Classification ID: 91B50
zbMATH DE Number: 5813801
zbMATH Keywords: prediction market
zbMATH Keywords: equilibrium behavior
zbMATH Keywords: market marker, trader
zbMATH Keywords: bluffing
zbMATH Keywords: strategic betting
MaRDI profile type: Publication
OpenAlex ID: W2117785059
cites work: When are signals complements or substitutes?
cites work: Q4023085
cites work: Computation in a distributed information market
cites work: Continuous Auctions and Insider Trading
cites work: Q4902563
cites work: Information, trade and common knowledge
DOI: 10.1007/S00453-009-9323-2
description: scientific article; zbMATH DE number 5813801