 The wisdom of the crowd and prediction marketsMin Dai, Yanwei Jia and Steven Kou Journal of Econometrics, 2021, vol. 222, issue 1, 561-578 Abstract: Thanks to digital innovation, the wisdom of the crowd, which aims at gathering information (e.g. Wikipedia) and making a prediction (e.g. using prediction markets) from a group’s aggregated inputs, has been widely appreciated. An innovative survey design, based on a Bayesian learning framework, called the Bayesian truth serum (BTS), was proposed previously to reduce the bias in the simple majority rule by asking additional survey questions. A natural question is whether we can extend the BTS framework to prediction markets (not just polls). To do so, this paper proposes two estimators, one based on a prediction market alone and the other based on both the market and a poll question. We show that both estimators are consistent within the BTS framework, under different sets of regularity conditions. Simulations are conducted to examine the convergence of different estimators. A real data set of sports betting is used to demonstrate the effectiveness of one estimator. Keywords: Prediction markets; Public opinion polls; Information aggregation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:econom:v:222:y:2021:i:1:p:561-578 DOI: 10.1016/j.jeconom.2020.07.016 Access Statistics for this article Journal of Econometrics is currently edited by T. Amemiya, A. R. Gallant, J. F. Geweke, C. Hsiao and P. M. Robinson More articles in Journal of Econometrics from Elsevier |
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