Arbeitspapier
Manipulation and (mis)trust in prediction markets
Markets are increasingly used as information aggregation mechanisms to predict future events. If policy makers make use markets, parties may attempt to manipulate the market in order to influence decisions. We experimentally find that policymakers could still benefit from following information contained in market prices. Nonetheless, manipulation is detrimental. First, manipulators affect market prices, making them less informative. Second, when there are manipulators, policy makers often ignore - or even act against - the information revealed in market prices. Finally, mere suspicion of manipulation erodes trust in the market, leading to the implementation of suboptimal policies - even without actual manipulation.
- Language
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Englisch
- Bibliographic citation
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Series: FAU Discussion Papers in Economics ; No. 12/2019
- Classification
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Wirtschaft
Design of Experiments: Laboratory, Group Behavior
General Equilibrium and Disequilibrium: Financial Markets
Information and Market Efficiency; Event Studies; Insider Trading
- Subject
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prediction markets
policy
experiment
- Event
-
Geistige Schöpfung
- (who)
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Choo, Lawrence
Kaplan, Todd R.
Zultan, Ro'i
- Event
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Veröffentlichung
- (who)
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Friedrich-Alexander-Universität Erlangen-Nürnberg, Institute for Economics
- (where)
-
Nürnberg
- (when)
-
2019
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Choo, Lawrence
- Kaplan, Todd R.
- Zultan, Ro'i
- Friedrich-Alexander-Universität Erlangen-Nürnberg, Institute for Economics
Time of origin
- 2019
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