Abstract
Prediction markets are a promising tool to improve decision-making: they incentivize information-seeking and truthful information revelation, and naturally aggregate information. However, using prediction markets is fundamentally limited by the fact that events traded in the market need to be resolvable. In this paper, we propose a mechanism that incentivizes accuracy and aggregates information for unresolvable events. Market participants decide whether to endorse a statement and trade an asset whose value depends on the endorsement rate. The respective payoffs of buyers and sellers indicate whose endorsement to trust. We demonstrate theoretically and illustrate empirically that “following the money” outperforms selecting the majority opinion.
The seminar will be virtual. To join, please use the following link:
https://uio.zoom.us/j/67176493367
Meeting ID: 671 7649 3367