2012/05/09 by Vincent Conitzer, Conitzer, Vincent
Business, Management and Accounting · Economics, Econometrics and Finance · #Computer Science and Game Theory (cs.GT) #Consumer Market Behavior and Pricing #FOS: Computer and information sciences #Sports Analytics and Performance
paper · pdf · doi:10.48550/arxiv.1205.2654
openalex publication_date 2012/05/09 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
Prediction markets are designed to elicit information from multiple agents in order to predict (obtain probabilities for) future events. A good prediction market incentivizes agents to reveal their information truthfully; such incentive compatibility considerations are commonly studied in mechanism design. While this relation between prediction markets and mechanism design is well understood at a high level, the models used in prediction markets tend to be somewhat different from those used in mechanism design. This paper considers a model for prediction markets that fits more straightforwardly into the mechanism design framework. We consider a number of mechanisms within this model, all based on proper scoring rules. We discuss basic properties of these mechanisms, such as incentive compatibility. We also draw connections between some of these mechanisms and cooperative game theory. Finally, we speculate how one might build a practical prediction market based on some of these ideas.