An axiomatic characterization of wagering mechanisms

Nicolas Lambert, John Langford, Jennifer Wortman Vaughan, Yiling Chen, Daniel M. Reeves, Yoav Shoham and David M. Pennock

Journal of Economic Theory, 2015, vol. 156, issue C, 389-416

Abstract: We construct a budget-balanced wagering mechanism that flexibly extracts information about event probabilities, as well as the mean, median, and other statistics from a group of individuals whose beliefs are immutable to the actions of others. We show how our mechanism, called the Brier betting mechanism, arises naturally from a modified parimutuel betting market. We prove that it is essentially the unique wagering mechanism that is anonymous, proportional, sybilproof, and homogeneous. While the Brier betting mechanism is designed for individuals with immutable beliefs, we find that it continues to perform well even for Bayesian individuals who learn from the actions of others.

Keywords: Betting market; Wagering mechanism; Parimutuel betting; Scoring rule; Belief elicitation; Prediction market (search for similar items in EconPapers)
JEL-codes: D53 D82 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:156:y:2015:i:c:p:389-416

DOI: 10.1016/j.jet.2014.03.012

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