211project2009+_4_

211project2009+_4_ - MS&E 211 Course Project Prediction...

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October 6, 2009 The prediction market (also called information market) is a fast developing area of research. Empirical studies have shown that the wisdom of crowds have a stronger prediction power than the other prediction alternatives, such as taking polls or asking experts’ opinions. In this course project, you are asked to study and explore some theories of the prediction market as well as implement it. Your data will be from the course website, which is the game you played throughout this quarter. In the following, please try your best to address all the questions. For most of the questions, you can find useful information on the papers we referred. Also, you are welcomed to use any references you like, but make sure to cite them when you use. The background of this project is the football prediction market game you played throughout this quarter. Assume that there are m states of futures of which exactly one will happen. Each bidder is allowed to bid on any subset of the states, with a price limit and a quantity limit. In what follows, we use a j to denote the bid profile of the j th bidder, π j to denote his price limit and q j to denote his share quantity limit. The call auction model we studied in class (see course Slide #2 and the supplement slides on information
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211project2009+_4_ - MS&E 211 Course Project Prediction...

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