IDEAS home Printed from https://ideas.repec.org/a/buc/jpredm/v3y2009i2p1-20.html
   My bibliography  Save this article

Influences on the Trust in Prediction Markets

Author

Listed:
  • Thomas Seemann
  • Albrecht Enders
  • Harald Hungenberg

Abstract

Prediction markets are an innovative forecasting method that has proven high prediction accuracy in many areas. The method is, however, far from being established since many organizations are still reluctant to use the method. In particular the trust in the forecast results is a key challenge that negatively impacts the adoption of the method. To get a better understanding of what drives trust in prediction markets we analyzed the perceptions of prediction market users. We identify factors that influence the trust and quantified them in an empirical study. The study is based on user surveys in six experimental prediction markets. The influencing factors were evaluated using a structural equation model. The results demonstrate that participants who are highly engaged and perceive trading in prediction market as exciting and entertaining also put a higher trust in the market results.

Suggested Citation

  • Thomas Seemann & Albrecht Enders & Harald Hungenberg, 2009. "Influences on the Trust in Prediction Markets," Journal of Prediction Markets, University of Buckingham Press, vol. 3(2), pages 1-20, August.
  • Handle: RePEc:buc:jpredm:v:3:y:2009:i:2:p:1-20
    as

    Download full text from publisher

    File URL: http://www.ingentaconnect.com/content/ubpl/jpm/2009/00000003/00000002/art00001
    Download Restriction: no

    References listed on IDEAS

    as
    1. Jana P. Fidrmuc & Marc Goergen & Luc Renneboog, 2006. "Insider Trading, News Releases, and Ownership Concentration," Journal of Finance, American Finance Association, vol. 61(6), pages 2931-2973, December.
    2. Charles Cao & Zhiwu Chen & John M. Griffin, 2005. "Informational Content of Option Volume Prior to Takeovers," The Journal of Business, University of Chicago Press, vol. 78(3), pages 1073-1109, May.
    3. Seyhun, H. Nejat, 1986. "Insiders' profits, costs of trading, and market efficiency," Journal of Financial Economics, Elsevier, vol. 16(2), pages 189-212, June.
    4. Cornell, Bradford & Sirri, Erik R, 1992. " The Reaction of Investors and Stock Prices to Insider Trading," Journal of Finance, American Finance Association, vol. 47(3), pages 1031-1059, July.
    5. Schnytzer, Adi & Shilony, Yuval, 1995. "Inside Information in a Betting Market," Economic Journal, Royal Economic Society, vol. 105(431), pages 963-971, July.
    6. Meulbroek, Lisa K, 1992. " An Empirical Analysis of Illegal Insider Trading," Journal of Finance, American Finance Association, vol. 47(5), pages 1661-1699, December.
    7. Justin Wolfers, 2006. "Point Shaving: Corruption in NCAA Basketball," American Economic Review, American Economic Association, pages 279-283.
    8. Thaler, Richard H & Ziemba, William T, 1988. "Parimutuel Betting Markets: Racetracks and Lotteries," Journal of Economic Perspectives, American Economic Association, pages 161-174.
    9. Les Coleman, 2007. "Just How Serious is Insider Trading? An Evaluation using Thoroughbred Wagering Markets," Journal of Gambling Business and Economics, University of Buckingham Press, vol. 1(1), pages 31-55, February.
    10. Camerer, Colin & Loewenstein, George & Weber, Martin, 1989. "The Curse of Knowledge in Economic Settings: An Experimental Analysis," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1232-1254, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:buc:jpredm:v:3:y:2009:i:2:p:1-20. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson, College of the Holy Cross). General contact details of provider: http://www.ubpl.co.uk/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.