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dc.contributor.authorWolfers, Justinen
dc.contributor.authorZitzewitz, Ericen
dc.date.accessioned2006-11-07-
dc.date.accessioned2010-07-07T09:09:28Z-
dc.date.available2010-07-07T09:09:28Z-
dc.date.issued2006-
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
dc.language.isoengen
dc.publisher|aInstitute for the Study of Labor (IZA) |cBonnen
dc.relation.ispartofseries|aIZA Discussion Papers |x2092en
dc.subject.jelD4en
dc.subject.jelD8en
dc.subject.jelG13en
dc.subject.ddc330en
dc.subject.keywordManskien
dc.subject.keywordinformation marketen
dc.subject.keywordevent futureen
dc.subject.keywordoptionsen
dc.subject.keywordfuturesen
dc.subject.keywordbinary optionen
dc.subject.stwPrognoseen
dc.subject.stwPrognoseverfahrenen
dc.subject.stwInformationsmarkten
dc.subject.stwTermingeschäften
dc.subject.stwPräferenztheorieen
dc.titleInterpreting prediction market prices as probabilities-
dc.type|aWorking Paperen
dc.identifier.ppn510931871en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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