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The Effects of Prediction Market Design and Price Elasticity on Trading Performance of Users : An Experimental Analysis
Type
conference paper
Date Issued
2012-04-18
Author(s)
Research Team
IWI6, CCC, Crowdsourcing
Abstract
We employ a 2x3 factorial experiment to study two central factors in the design of prediction markets (PMs) for idea evaluation: the overall design of the PM, and the elasticity of market prices set by a market maker. The results show that 'multi-market designs' on which each contract is traded on a separate PM lead to significantly higher trading performance than 'single-markets' that handle all contracts one on PM. Price elasticity has no direct effect on trading performance, but a significant interaction effect with market design implies that the performance difference between the market designs is highest in settings of moderate price elasticity. We contribute to the emerging research stream of PM design through an unprecedented experiment which compares current market designs.
Project(s)
Language
English
Keywords
Prediction market
market design
market making
price elasticity
idea evaluation
CCC
HSG Classification
not classified
HSG Profile Area
SoM - Business Innovation
Refereed
Yes
Book title
Social and Information Networks
Publisher
Cornell University Library
Publisher place
Ithaca
Volume
Paper 77
Start page
8
Event Title
Collective Intelligence 2012
Event Location
Cambridge
Event Date
18.-20.04.2012
Subject(s)
Division(s)
Eprints ID
219752
File(s)