Computational and Strategic Foundations of Prediction Markets

Rahul Sami

Overview

Prediction markets (or information markets) are markets specifically designed to aggregate information distributed among autonomous agents by enabling trade in securities for which the ultimate payoff value depends on future events. In recent years, many such markets have been deployed on the Internet, including markets to aggregate information and opinions on: political events; scientific and technological breakthroughs; movie box office receipts; and public interest in new products and technologies. The goal of this project is to develop a strong theoretical foundation to help us understand the optimal short- and long-term strategic behavior for informed traders in different market forms, and the impact this has on the speed and efficiency of markets as tools to compute aggregates of distributed information.

Funding support

This project is currently supported by the National Science Foundation under award CCF-0728768. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation.

Publications