prediction markets at yahoo!
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David Pennock Yiling Chen, Tej Kasturi, Havi Hoffman, Dan Reeves - PowerPoint PPT PresentationTRANSCRIPT
Prediction Marketsat Yahoo!
David Pennock
Yiling Chen, Tej Kasturi, Havi Hoffman, Dan Reeves
Chao-Hsien Chu, Sandip Debnath, Mike Dooley, Rael Dornfest,Joan Fiegenbaum, Gary Flake, Lance Fortnow, Brian Galebach,Lee Giles, Joe Kilian, Steve Lawrence, Bernard Mangold, Tracy Mullen, Rahul Sami, Emile Servan-Schreiber, Michael Wellman, Justin Wolfers
Prediction markets @ Y!
*not to scale
microeconomics
predictionmarkets
Prediction markets @ Y!
Design Build Analyze
HSXNFTSWSEXFXPS
Case Study I
Design
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Analyze
• Dynamic parimutuel
– Market maker
– Cross btw stock market and horse race betting
Build
1
1
1
1
11
1
1
1
11
1
Parimutuel market
.49
.4
.3
0.97.96
.94
.91
.87
.78.59
.82
Dynamic parimutuel market
C(1,2)=2.2
C(2,2)=2.8C(2,3)=3.6
C(2,4)=4.5
C(2,5)=5.4
C(2,6)=6.3
C(2,7)=7.3
C(2,8)=8.2
C(3,8)=8.5
C(4,8)=8.9
C(5,8)=9.4
Share-ratio cost function: C(q1,q2)=q1
2+q22
Properties
•No arbitrage
•pricei/pricej = qi/qj
•pricei < $1
•payoff if right = C/qo > $1
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http://buzz.research.yahoo.com
Analysis
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Case Study II
Design Build
• Yootopia: Y!Internal economy for favors, predictions, grp decisions
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QuickTime™ and aTIFF (LZW) decompressor
are needed to see this picture.
QuickTime™ and aTIFF (LZW) decompressor
are needed to see this picture.
QuickTime™ and aTIFF (LZW) decompressor
are needed to see this picture.
QuickTime™ and aTIFF (LZW) decompressor
are needed to see this picture.
Analyze
More
Design
• Betting mechanisms
– Combinatorics
– Infinite/continuous
– Linear programming backbone
• Market makers
• Applications
Build Analyze
• Computational complexity
• Does money matter?
• Wisdom of crowds: Combining experts
• IOU social network
• Ledger system
• Buzz Game: Tech stock horse race