lecture02s - LP Example 5 Combinatorial Auction for...

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Yinyu Ye, 2009 MS&E211, Lecture #2 LP Example 5: Combinatorial Auction for Information Market Yinyu Ye Stanford University MS&E 211
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Yinyu Ye, 2009 MS&E211, Lecture #2 What is Information Market? A place where information is aggregated via market for the primary purpose of forecasting events. • Why : – Wisdom of the Crowds: Under the right conditions groups can be remarkably intelligent and possibly smarter than the smartest person. James Surowiecki – Efficient Market Hypothesis: financial markets are “informationally efficient”, prices reflect all known information
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Yinyu Ye, 2009 MS&E211, Lecture #2 Sport Betting Market Market for Betting the World Cup Winner Assume 5 teams have a chance to win the World Cup: Argentina, Brazil, Italy, Germany and France
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Yinyu Ye, 2009 MS&E211, Lecture #2 Options for the Market Double Auction : Let participants trade directly with one another Requires participants to find someone to take the other side of their order (i.e.: the complement of the set of teams
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