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dc.contributor.authorWolfers, Justinen_US
dc.contributor.authorZitzewitz, Ericen_US
dc.date.accessioned2006-11-07en_US
dc.date.accessioned2010-07-07T09:09:28Z-
dc.date.available2010-07-07T09:09:28Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/33261-
dc.description.abstractWhile most empirical analysis of prediction markets treats prices of binary options as predictions of the probability of future events, Manski (2004) has recently argued that there is little existing theory supporting this practice. We provide relevant analytic foundations, describing sufficient conditions under which prediction markets prices correspond with mean beliefs. Beyond these specific sufficient conditions, we show that for a broad class of models prediction market prices are usually close to the mean beliefs of traders. The key parameters driving trading behavior in prediction markets are the degree of risk aversion and the distribution on beliefs, and we provide some novel data on the distribution of beliefs in a couple of interesting contexts. We find that prediction markets prices typically provide useful (albeit sometimes biased) estimates of average beliefs about the probability an event occurs.en_US
dc.language.isoengen_US
dc.publisherIZA Bonnen_US
dc.relation.ispartofseriesIZA Discussion Papers 2092en_US
dc.subject.jelD4en_US
dc.subject.jelD8en_US
dc.subject.jelG13en_US
dc.subject.ddc330en_US
dc.subject.keywordManskien_US
dc.subject.keywordinformation marketen_US
dc.subject.keywordevent futureen_US
dc.subject.keywordoptionsen_US
dc.subject.keywordfuturesen_US
dc.subject.keywordbinary optionen_US
dc.subject.stwPrognoseen_US
dc.subject.stwPrognoseverfahrenen_US
dc.subject.stwInformationsmarkten_US
dc.subject.stwTermingeschäften_US
dc.subject.stwPräferenztheorieen_US
dc.titleInterpreting prediction market prices as probabilitiesen_US
dc.typeWorking Paperen_US
dc.identifier.ppn510931871en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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