Sign up & Download
Sign in

How to Pay Traders in Information Markets: Results from a Field Experiment

by Stefan Luckner, Christof Weinhardt
Journal of Prediction Markets ()

Abstract

The results of recent studies on prediction markets are encouraging. Prior experience demonstrates that markets with different incentive schemes predicted uncertain future events remarkably accurately. In this paper, we study the impact of different monetary incentives on prediction accuracy in a field experiment. In order to do so, we compare three groups of traders, corresponding to three treatments with different payment schemes, in a prediction market for the FIFA World Cup 2006. Somewhat surprisingly, our results show that performance-related payment schemes do not necessarily increase the prediction accuracy. Due to the risk aversion of traders the competitive environment in a rank-order tournament leads to the best results in terms of prediction accuracy.

Cite this document (BETA)

Readership Statistics

8 Readers on Mendeley
by Discipline
 
 
 
by Academic Status
 
50% Ph.D. Student
 
25% Student (Master)
 
13% Post Doc
by Country
 
13% Switzerland
 
13% Germany
 
13% Australia

Tags

Sign up today - FREE

Mendeley saves you time finding and organizing research. Learn more

  • All your research in one place
  • Add and import papers easily
  • Access it anywhere, anytime

Start using Mendeley in seconds!

Already have an account? Sign in