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Efficiency of the Experimental Prediction Market: Public Information, Belief Evolution, and Personality Traits

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  • Bin-Tzong Chie
  • Chih-Hwa Yang

Abstract

This paper examines the ability of markets to aggregate information so that the price generated from the market contains the best estimate of all the available information. The paper investigates how individuals “update†their initial beliefs from their public and private information in light of market prices. In particular, the paper looks at individuals' weighting of public information versus private information. Also, the volume of information in the market via an increased number of traders with private information has a positive impact on the quality of the market price. Lastly, the personality traits of the traders seem to provide some positive impact if the traders are diverse in terms of the proportion of “efficient and organized†traders in the market. JEL classification numbers: C91, C92, D82

Suggested Citation

  • Bin-Tzong Chie & Chih-Hwa Yang, 2021. "Efficiency of the Experimental Prediction Market: Public Information, Belief Evolution, and Personality Traits," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 11(4), pages 1-3.
    • Handle: RePEc:spt:admaec:v:11:y:2021:i:4:f:11_4_3
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    More about this item

    Keywords

    Experimental economics; Prediction markets; Belief; Market efficiency; Personality traits.;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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