Self-resolving Information Markets: A Comparative Study

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Published: Mar 9, 2020
DOI: https://doi.org/10.5750/jpm.v13i1.1687
Keywords:
Information markets Prediction markets Self-resolving markets Coordination games Long-term forecasts

Main Article Content

Kristoffer Ahlstrom-Vij
Birbeck College, University of London

Abstract

Traditional information markets (TIMs) are resolved with reference to events external to the markets, such as some particular candidate winning an election. However, when making long-term forecasts or evaluating counterfactuals, such resolution is not an option. Hence, the need for self-resolving information markets (SRIMs), resolved with reference to features internal to the markets themselves. The present paper demonstrates experimentally that the market profiles of otherwise identical TIMs and SRIMs show significantly higher degrees of correlation than do randomly paired markets, and that the average accuracies of TIMs and SRIMs are practically equivalent. This supports the so-called face-value hypothesis, on which a convention will arise on SRIMs of taking the question under consideration at face value and betting accordingly, in the same way as on TIMs—in which case SRIMs have the potential of matching TIMs in accuracy while shedding their limitations in relation to long-term predictions and counterfactuals.

Article Details

Issue
Vol. 13 No. 1 (2019)
Section
Articles
Author Biography

Kristoffer Ahlstrom-Vij, Birbeck College, University of London

Dr Kristoffer Ahlstrom-Vij is Reader in Philosophy at Birkbeck College, University of London. His work on forecasting focuses on information markets, and on the prospects of self-resolving information markets in particular.

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