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Partition-dependent framing effects in lab and field prediction markets

Sonnemann, Ulrich and Camerer, Colin F. and Fox, Craig R. and Langer, Thomas (2008) Partition-dependent framing effects in lab and field prediction markets. University of Muenster , Muenster, Germany. https://resolver.caltech.edu/CaltechAUTHORS:20110209-161226104

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Abstract

Many psychology experiments show that individually judged probabilities of the same event can vary depending on the partition of the state space (a framing effect called "partition-dependence"). We show that these biases transfer to competitive prediction markets in which multiple informed traders are provided economic incentives to bet on their beliefs about events. We report results of a short controlled lab study, a longer field experiment (betting on the NBA playoffs and the FIFA World Cup), and naturally-occurring trading in macro-economic derivatives. The combined evidence suggests that partition-dependence can exist and persist in lab and field prediction markets.


Item Type:Report or Paper (Report)
Related URLs:
URLURL TypeDescription
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1099073SSRNWorking Paper
ORCID:
AuthorORCID
Camerer, Colin F.0000-0003-4049-1871
Additional Information:We thank Justin Wolfers for providing the economic derivatives market data used in Section IV, audiences at Toronto (JDM meeting 2005), Muenster (July 2007), Mannheim (June 2006), Caltech (May 2007), Rome (ESA 2007), Warsaw (SPUDM 2007), and Chicago (October 2007). Thanks to Sera Linardi for feedback. This research was supported by the DFG-grant LA1316/3-1, NSF grant (CRF), the Moore Foundation, NSF-HSD and HSFP grants (CFC).
Funders:
Funding AgencyGrant Number
Deutsche Forschungsgemeinschaft (DFG)LA1316/3-1
NSFUNSPECIFIED
Gordon and Betty Moore FoundationUNSPECIFIED
Human Frontier Science ProgramUNSPECIFIED
Subject Keywords:prediction markets, framing effects
Classification Code:JEL classification: D8, G1.
Record Number:CaltechAUTHORS:20110209-161226104
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20110209-161226104
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:22100
Collection:CaltechAUTHORS
Deposited By: Tony Diaz
Deposited On:21 Oct 2011 21:33
Last Modified:03 Oct 2019 02:34

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