Peer Prediction Markets to Elicit Unverifiable Information
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NUS Quantitative Finance Joint Seminar Series (Webinar)
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Date: 21 September 2021, Tuesday Time: 4:00pm to 5:00pm (Singapore Time Zone, GMT +8)
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Title: Peer Prediction Markets to Elicit Unverifiable Information Prof. Aurélien Baillon (Erasmus University Rotterdam) Abstract: Prediction markets reward ex-post accuracy to incentivize agents to seek and reveal information. Some private signals, such as individual experiences or very long-run predictions, do not concern verifiable outcomes. In such cases, outcome-based rewards are not feasible. This paper presents peer prediction markets to elicit subjective judgments in binary questions of unverifiable information. Agents choose whether they receive a costly signal, which lead them to endorse either `yes' or `no' as an answer. Then, they either buy or sell a single unit of an asset at a price whose price is determined by endorsement rate of `yes'. The price of the asset is set at the prior expectation of the endorsement rate. We obtain a separating equilibrium, where agents buy or sell the asset as a function of their signal. Evidence from two experimental studies demonstrate that peer prediction markets motivate agents to seek costly information and reveal it.
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Aurélien Baillon is Professor of Economics of Uncertainty and Head of the Behavioral Economics group, at Erasmus University Rotterdam. His work focuses on individual decision making under risk and ambiguity, and the elicitation of private information. Through both empirical and theoretical studies, his research addresses issues in subjective probability elicitation, models of attitude towards risk and ambiguity, and aggregation of expert opinions. He is also associate editor at Management Science, coordinating editor at Theory and Decision, and has published in prestigious journals such as Econometrica, The American Economic Review, PNAS, and Psychological Science.
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For more information on all our workshops & seminars, please visit Risk Management Institute website. For enquiries, please contact Sinta at sintayo@nus.edu.sg. Kindly note that recordings and presentation materials will not be made available after the webinar.
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