Bitte verwenden Sie diesen Link, um diese Publikation zu zitieren, oder auf sie als Internetquelle zu verweisen: https://hdl.handle.net/10419/33261 
Erscheinungsjahr: 
2006
Schriftenreihe/Nr.: 
IZA Discussion Papers No. 2092
Verlag: 
Institute for the Study of Labor (IZA), Bonn
Zusammenfassung: 
While 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.
Schlagwörter: 
Manski
information market
event future
options
futures
binary option
JEL: 
D4
D8
G13
Dokumentart: 
Working Paper

Datei(en):
Datei
Größe
281.81 kB





Publikationen in EconStor sind urheberrechtlich geschützt.