73-315 Market Design
Final Paper due 5/2/2014
Prediction markets are markets in which participants submit a bid, contract, or bet at a
certain price for predicting the outcome of a future event. Their payoffs are entirely
Fourth Homework Assignment Solutions
1. (Sponsored Search) A sponsored search problem in which the positions receive 300,
200 and 100 clicks, and the bidder values are $10, $7, and $2 per click.
a. The lowest market clearing prices are $3, $1 and $0. The