Parimutuel betting markets as information aggregation devices: experimental results

Charles Plott (), Jorgen Wit and Winston C. Yang

Economic Theory, 2003, vol. 22, issue 2, 351 pages

Abstract: The demonstrated capacity of markets to aggregate information motivates research on alternative institutions designed to do the same task. This study inquires about forms of parimutuel betting systems. Measures of information aggregation for performance evaluation are introduced. Two environments are studied. The first poses a simpler aggregation problem than does the second. Information aggregation can be detected under both environments but the degree depends on the choice of baselines. The competitive equilibrium rational expectations model is clearly the best model in the simpler environment but, in the more complex environment, models based on private information alone are more accurate. Bluffing and waiting inhibit aggregation and time and experience are conjectured to lead to more rational expectations-like performance. Copyright Springer-Verlag Berlin Heidelberg 2003

Keywords: Keywords and Phrases:General: laboratory; Individual and group behavior; Information and uncertainty; Asymmetric and private Information.; JEL Classification Numbers:C90; C91; C92; D8; D40; D82. (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (51)

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Working Paper: Parimutuel Betting Markets as Information Aggregation Devises: Experimental Results (1997)
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DOI: 10.1007/s00199-002-0306-7

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