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The design of improved parimutuel-type information aggregation mechanisms: Inaccuracies and the long-shot bias as disequilibrium phenomena

Axelrod, Boris S. and Kulick, Ben J. and Plott, Charles R. and Roust, Kevin A. (2009) The design of improved parimutuel-type information aggregation mechanisms: Inaccuracies and the long-shot bias as disequilibrium phenomena. Journal of Economic Behavior & Organization, 69 (2). pp. 170-181. ISSN 0167-2681. https://resolver.caltech.edu/CaltechAUTHORS:20100505-132128290

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Abstract

Information aggregation mechanisms (IAMs) based on parimutuel-type betting systems can aggregate information from complex environments. However, the performance of previously studied systems is imperfect due to possible bluffing, strategic timing of decisions, and “long-shot bias”. This paper demonstrates two modifications of parimutuel systems that improve information aggregation performance by removing disinformation due to strategic behavior and by removing misleading disequilibrium behavior. These experiments also demonstrate that “long-shot bias” results from disequilibrium behavior as opposed to being inherent in the psychology of the individuals.


Item Type:Article
Related URLs:
URLURL TypeDescription
http://dx.doi.org/10.1016/j.jebo.2007.09.010DOIUNSPECIFIED
Additional Information:© 2008 Elsevier B.V. All rights reserved. Received 21 February 2007; accepted 12 September 2007. Available online 24 September 2008. The financial support of the National Science Foundation is gratefully acknowledged. The comments of David Grether, Colin Camerer, and Robert Sherman have been very helpful.
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Funding AgencyGrant Number
NSFUNSPECIFIED
Subject Keywords:Information aggregation; Parimutuel; Forecasting
Issue or Number:2
Classification Code:JEL: C-92; D-44; D-71; D-8
Record Number:CaltechAUTHORS:20100505-132128290
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20100505-132128290
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:18139
Collection:CaltechAUTHORS
Deposited By: Ruth Sustaita
Deposited On:05 May 2010 20:57
Last Modified:03 Oct 2019 01:38

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