Outcome Manipulation in Corporate Prediction Markets

Marco Ottaviani () and Peter Norman Sørensen ()

Journal of the European Economic Association, 2007, vol. 5, issue 2-3, pages 554-563

Abstract: This paper presents a framework for applying prediction markets to corporate decision-making. The analysis is motivated by the recent surge of interest in markets as information aggregation devices and their potential use within firms. We characterize the amount of outcome manipulation that results in equilibrium and the impact of this manipulation on market prices. (JEL: D71, D82, D83, D84) (c) 2007 by the European Economic Association.

Date: 2007
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