# Combinatorial Information Market Design

@article{Hanson2003CombinatorialIM, title={Combinatorial Information Market Design}, author={Robin D. Hanson}, journal={Information Systems Frontiers}, year={2003}, volume={5}, pages={107-119} }

Information markets are markets created to aggregate information. Such markets usually estimate a probability distribution over the values of certain variables, via bets on those values. Combinatorial information markets would aggregate information on the entire joint probability distribution over many variables, by allowing bets on all variable value combinations. To achieve this, we want to overcome the thin market and irrational participation problems that plague standard information markets… Expand

#### 441 Citations

Information Aggregation and Allocative Efficiency in Smooth Markets

- Economics
- 2010

Recent years have seen extensive investigation of the information aggregation properties of markets. However, relatively little is known about conditions under which a market will aggregate the… Expand

The Hidden Beauty of the Quadratic Market Scoring Rule: A Uniform Liquidity Market Maker, with Variations

- Economics
- 2007

For some applications, prediction markets that rely entirely on voluntary transactions between individual participants may provide insufficient liquidity to aggregate information effectively,… Expand

Information Aggregation and Allocative Efficiency in Smooth Markets

- Computer Science
- Manag. Sci.
- 2014

This work identifies a basic asymptotic smoothness condition on prices in the market that ensures information is aggregated as long as portfolios converge; furthermore, under this assumption, the allocation achieved is ex post Pareto efficient. Expand

A strategic model for information markets

- Economics, Computer Science
- EC '07
- 2007

An analytic method to guide the design and strategic analysis of information markets and proves several strategic properties about the dynamic parimutuel market, and proves that a special form of the projection game is strategically equivalent to the spherical scoring rule, and it is strategically similar to other scoring rules. Expand

Pricing combinatorial markets for tournaments

- Computer Science
- STOC
- 2008

This paper derives a polynomial-time algorithm for a restricted betting language based on a Bayesian network representation of the probability distribution for single-elimination tournaments, and believes that this betting language is the first for combinatorial market makers that is both useful and tractable. Expand

Information aggregation in smooth markets

- Economics, Computer Science
- EC '10
- 2010

This work considers a market model involving finitely many informed risk-averse traders interacting with a market maker and identifies a basic asymptotic smoothness condition on the price in the market that ensures information will be aggregated under a portfolio convergence assumption. Expand

On a participation structure that ensures representative prices in prediction markets

- Economics, Computer Science
- Decis. Support Syst.
- 2017

It is proved that under the logarithmic market scoring rule, the market price converges after a finite number of rounds to the median of traders' private information for an odd number of traders, and to a point in the median interval for an even number of Traders. Expand

Market Making with Model Uncertainty

- Economics
- 2015

Pari-mutuel markets are trading platforms through which the common market maker simultaneously clears multiple contingent claims markets. This market has several distinctive properties that began… Expand

Market Making with Decreasing Utility for Information

- Computer Science, Economics
- UAI
- 2014

Adaptive cost functions are designed for both settings which preserve the information previously gathered in the market and eliminate (or diminish) rewards to traders for the publicly revealed information. Expand

Price Evolution in a Continuous Double Auction Prediction Market With a Scoring-Rule Based Market Maker

- Computer Science
- AAAI
- 2015

It is found that the presence of the market maker leads to generally lower bid-ask spreads and higher trader surplus, but does not necessarily improve price discovery and market efficiency; this latter effect is more pronounced when there is higher variability in trader beliefs. Expand

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