Computer-driven market making increases liquidity, which improves the price accuracy and decreases transaction costs.
What’s not to love?
Meta
-
Recent Posts
- Native apps are reigning on mobiles, but Jakob Nielsen strategically bets on web apps. — [LINK]
- Steven Krivit continues to trash Andrea Rossi and his LENR technology. — [LINK]
- Interview with Adam Lashinsky — [VIDEO]
- Why some people are more innovative — [VIDEO]
- Forbes editor deciphers Steve Jobs’s Apple. — [VIDEO]
- Jason Ruspini rebuts Eric Zitzewitz on the regulation of political prediction markets. — [COMMENT]
- Eric Zitzewitz petitions the CFTC in favor of real-money prediction markets about politics. — [TEXT]
- Global warming is a big scam. — [LINK]
- A Swarm of Nano Quadrotors — [VIDEO]
- The Tragedy of the Commons — [VIDEO]
- Guy Kawasaki on Steve Jobs — [VIDEO]
- Inside Apple — [VIDEO]
- Mitt Romney’s taxes — [LINKS]
- A critique of Apple’s multimedia iBooks. — [LINK]
- Does Apple lack “generosity”? — [LINKS]
- Apple Education Push — [LINKS]
- Water Crystals — [DOCUMENT]
- Apple’s e-book software will allow publishers to make textbooks more interactive. — [LINKS + VIDEO]
- Alain Soral is France’s most dangerous intellectual… (dangerous for the French plutocrats, that is). — [VIDEO]
- Computers thru time — [CHART]
Cav, we’re talking here about an automated market maker that links a real-money prediction exchange with some play-money prediction exchanges. Where are the specifications of this automated market maker published? In this configuration, as I understand it, you can have ZERO human traders on the play-money prediction exchanges and still have trades generated automatically, with probabilities generated. Isn’t that absurd? In any cases, things should be disclosed.
well, play money is play money. as imperfect and constrained as real money prices might be, fake money prices are even less predictive.
Re: “Isn’t that absurd?”
How are they motivating the automated market maker in the play money market? A simple approach would require the automated market maker to accept bids/offers within the bid-ask spread on the real money market. In cases where the bid-ask spread on the real money exchange is relatively large, the play money prices might get funky, but no funkier than permitted by the bounds set by the real money exchange.
I don’t see why that kind of approach would be a bad way to set up a play money market, given that if you are Intrade you already have access to the real money market data.
If the play money market fakes trading to appear active, then that begins to seem a little fishy.
But play money is play money. If humans like it, and they aren’t hurting anyone, then why complain. If humans don’t like it because it smells fishy, it will fade away.