eprintid: 16442
rev_number: 8
eprint_status: archive
userid: 1482
importid: 105
dir: disk0/00/01/64/42
datestamp: 2015-03-16 14:23:59
lastmod: 2021-04-02 15:49:14
status_changed: 2015-03-16 14:23:59
type: monograph
metadata_visibility: show
creators_name: He, Xue-Zhong
creators_name: Treich, Nicolas
creators_idrefppn: 176599940
title: Necessary and Sufficient Conditions for Prediction Market Accuracy
ispublished: pub
subjects: subjects_ECO
abstract: We consider a binary-event prediction market in which traders have
heterogeneous prior beliefs. We derive conditions so that the prediction
market is accurate in the sense that the equilibrium price equals
the mean of traders’ beliefs. We show that the prediction market is
accurate i) for all distributions of beliefs if and only if the utility function
is logarithmic, and ii) for all strictly concave utility functions if
and only if the distribution of beliefs is symmetric about one half. We
also exhibit a necessary and sufficient condition for the equilibrium
price to be always above or below the mean beliefs for all symmetric
beliefs distributions.
date: 2011-02
date_type: published
official_url: http://tse-fr.eu/pub/25825
faculty: tse
divisions: tse
keywords: Prediction market
keywords: heterogeneous beliefs
keywords: risk aversion
keywords: favorite-longshot bias
keywords: and asset prices
language: en
has_fulltext: TRUE
view_date_year: 2011
full_text_status: public
monograph_type: working_paper
oai_identifier: oai:tse-fr.eu:25825
harvester_local_overwrite: oai_set
harvester_local_overwrite: faculty
harvester_local_overwrite: site
harvester_local_overwrite: creators_idrefppn
oai_lastmod: 2015-02-12T15:04:14Z
oai_set: tse
oai_set: ut1c
site: ut1
citation:   He, Xue-Zhong and Treich, Nicolas <https://www.idref.fr/176599940>  (2011) Necessary and Sufficient Conditions for Prediction Market Accuracy.       
document_url: https://publications.ut-capitole.fr/id/eprint/16442/1/medias/doc/by/treich/necessary.pdf