Affecting Policy by Manipulating Prediction Markets: Experimental Evidence
AbstractDocumented results indicate prediction markets effectively aggregate information and form accurate predictions. This has led to a proliferation of markets predicting everything from the results of elections to a company’s sales to movie box office receipts. Recent research suggests prediction markets are robust to manipulation attacks and resulting market outcomes improve forecast accuracy. However, we present evidence from the lab indicating that well funded, single minded manipulators can in fact destroy a prediction market’s ability to aggregate information. Our results clearly indicate that the usefulness of prediction markets as inputs to decision making may be limited.
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Bibliographic InfoPaper provided by Chapman University, Economic Science Institute in its series Working Papers with number 10-15.
Length: 34 pages
Date of creation: 2010
Date of revision:
Information Aggregation; Prediction Markets; Manipulation;
Other versions of this item:
- Deck, Cary & Lin, Shengle & Porter, David, 2013. "Affecting policy by manipulating prediction markets: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 48-62.
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- G1 - Financial Economics - - General Financial Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-30 (All new papers)
- NEP-CDM-2010-10-30 (Collective Decision-Making)
- NEP-EXP-2010-10-30 (Experimental Economics)
- NEP-FOR-2010-10-30 (Forecasting)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sumner Scott, 2006. "Let a Thousand Models Bloom: The Advantages of Making the FOMC a Truly 'Open Market'," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(1), pages 1-27, October.
- Paul Rhode & Koleman Strumpf, 2006. "Manipulating political stock markets: A field experiment and a century of observational data," Natural Field Experiments 00325, The Field Experiments Website.
- Lee, Hyunok & Sumner, Daniel A. & Ahn, Byeong-il, 2006. "Consequences of further opening of the Korean dairy market," Food Policy, Elsevier, vol. 31(3), pages 238-248, June.
- Hanson, Robin & Oprea, Ryan & Porter, David, 2006. "Information aggregation and manipulation in an experimental market," Journal of Economic Behavior & Organization, Elsevier, vol. 60(4), pages 449-459, August.
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