Equilibrium in Prediction Markets with Buyers and Sellers

We consider a situation where a certain \experiment" is planned, and traders are betting on its outcome. Typical examples could be a horse race and an election. Denote by the set of outcomes of the experiment and by the set of traders. Traders are interested in buying or selling betting contracts. For , a single contract entitle the purchaser receive from the seller of the contract one dollar in the event where the outcome is j.1

By: Shipra Agrawal; Nimrod Megiddo; Benjamin Ambruster

Published in: RJ10453 in 2009


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