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Affecting Policy by Manipulating Prediction Markets: Experimental Evidence

Cary Deck, Shengle Lin and David Porter

Working Papers from Chapman University, Economic Science Institute

Abstract: Documented results indicate prediction markets effectively aggregate information and form accurate predictions. This has led to a proliferation of markets predicting everything from the results of elections to a company’s sales to movie box office receipts. Recent research suggests prediction markets are robust to manipulation attacks and resulting market outcomes improve forecast accuracy. However, we present evidence from the lab indicating that well funded, single minded manipulators can in fact destroy a prediction market’s ability to aggregate information. Our results clearly indicate that the usefulness of prediction markets as inputs to decision making may be limited.

Keywords: Information Aggregation; Prediction Markets; Manipulation (search for similar items in EconPapers)
JEL-codes: C9 D8 G1 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2010
New Economics Papers: this item is included in nep-cdm, nep-exp and nep-for
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http://www.chapman.edu/ESI/wp/Porter_AffectingPoli ... redictionMarkets.pdf (application/pdf)

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Journal Article: Affecting policy by manipulating prediction markets: Experimental evidence (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:10-15

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