How manipulable are prediction markets?

Itzhak Rasooly and Roberto Rozzi

Papers from arXiv.org

Abstract: In this paper, we conduct a large-scale field experiment to investigate the manipulability of prediction markets. The main experiment involves randomly shocking prices across 817 separate markets; we then collect hourly price data to examine whether the effects of these shocks persist over time. We find that prediction markets can be manipulated: the effects of our trades are visible even 60 days after they have occurred. However, as predicted by our model, the effects of the manipulations somewhat fade over time. Markets with more traders, greater trading volume, and an external source of probability estimates are harder to manipulate.

Date: 2025-03
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2503.03312 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2503.03312

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().