|
|
Digital Library of the
European Council for Modelling and Simulation |
|
Title: |
Comparing Prediction Market Mechanisms Using An Experiment-Based
Multi-Agent Simulation |
|
Authors: |
Frank M. A. Klingert,
Matthias Meyer |
|
Published in:
|
(2012).ECMS
2012 Proceedings edited by: K. G. Troitzsch, M. Moehring, U. Lotzmann. European
Council for Modeling and Simulation. doi:10.7148/2012 ISBN:
978-0-9564944-4-3 26th
European Conference on Modelling and Simulation, Shaping reality through simulation Koblenz,
Germany, May 29 – June 1 2012 |
|
Citation
format: |
Klingert, F. M. A., & Meyer, M.
(2012). Comparing Prediction Market Mechanisms Using An Experiment-Based
Multi-Agent Simulation. ECMS 2012 Proceedings edited by: K. G. Troitzsch, M. Moehring, U. Lotzmann (pp. 654-661).
European Council for Modeling and Simulation. doi:10.7148/2012-0654-0661 |
|
DOI: |
http://dx.doi.org/10.7148/2012-0654-0661 |
|
Abstract: |
Prediction
markets are an interesting
instrument to draw on the “wisdom of the crowds”, e.g., to forecast sales or
project risks. So far, mainly two market mechanisms have been
implemented in prediction markets, the continuous double auction and
logarithmic market scoring rule. However, the
effects of the choice between these two market mechanisms on relevant variables
such as prediction market accuracy are not fully understood. These effects
are relevant as faulty prediction market outcomes might cause wrong
decisions. This work contributes via an experiment-based simulation model to
understand the mechanism-related effects and to direct further laboratory
experiments. Our results show, that the mechanism decision does matter. Due
to the higher amount of trades and the lower standard deviation of the price,
the logarithmic market scoring rule seems to have a
clear advantage on a first view. Taking the accuracy error as an independent
variable, the effects are not as straightforward and depend on the
environment and actors. |
|
Full
text: |
|
