Prediction markets can be directly subsidized with a market maker, allowing all traders who provide info to improve the price to expect to profit. Also, the more fools the more informed traders should be attracted to profit from them, so the mix is endogenous.

Posted on April 23, 2008 by Chris F. Masse

Robin Hanson in a comment, over there.

See also that question for Mike “Barbecue” Giberson.

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About Chris F. Masse

Founder and President of Midas Oracle

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This entry was posted in Analysis (Meta), Market Makers (Automated) and tagged automated market makers, event derivative markets, event derivatives, Mike "Barbecue" Giberson, prediction markets, Robin Hanson, subsidized prediction markets. Bookmark the permalink.

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