Price dynamics in political prediction markets

Price dynamics in political prediction markets.

Prediction markets, in which contract prices are used to forecast future events, are increasingly applied to various domains ranging from political contests to scientific breakthroughs. However, the dynamics of such markets are not well understood. Here, we study the return dynamics of the oldest, most data-rich prediction markets, the Iowa Electronic Presidential Election "winner-takes-all" ma...

Manipulation in Political Prediction Markets

Price and Quality Dynamics in Export Markets

This paper investigates the evolution of firm-level price and quality decisions in export markets. We develop a model of heterogeneous firms which endogenously choose their optimal price and product quality to build demand in each export market. Consistent with existing research, more productive firms produce higher quality products, charge higher prices, sell more units and achieve higher prof...

Price Dynamics of Vertically Diierentiated Information Markets

We explore the price dynamics of a vertically diierentiated market in which two or more sellers compete to provide an information good or service to a population of buyers. Each seller ooers the good or service at a xed level of \quality", and attempts to set its price in such a way that it maximizes its own proot. Five diierent seller pricing strategies, ranging widely from ones that require p...

Price manipulation in prediction markets: analysis and mitigation

We consider the possible existence of a manipulator in a prediction market, whose incentive is to maximally increase the predicted probability of an event, and for whom profit or loss in the market is immaterial. We characterize the equilibria in a single-round market scoring rule (MSR), showing that the manipulator will play a strategy that mixes between pretending to have received one of the ...