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Computing Equilibria of Prediction Markets via Persuasion

  • Jerry AnunrojwongEmail author
  • Yiling Chen
  • Bo Waggoner
  • Haifeng Xu
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 11920)

Abstract

We study the computation of equilibria in prediction markets in perhaps the most fundamental special case with two players and three trading opportunities. To do so, we show equivalence of prediction market equilibria with those of a simpler signaling game with commitment introduced by Kong and Schoenebeck [18]. We then extend their results by giving computationally efficient algorithms for additional parameter regimes. Our approach leverages a new connection between prediction markets and Bayesian persuasion, which also reveals interesting conceptual insights.

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Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Jerry Anunrojwong
    • 1
    • 2
    Email author
  • Yiling Chen
    • 3
  • Bo Waggoner
    • 4
  • Haifeng Xu
    • 3
    • 5
  1. 1.Massachusetts Institute of TechnologyCambridgeUSA
  2. 2.Chulalongkorn UniversityBangkokThailand
  3. 3.Harvard UniversityCambridgeUSA
  4. 4.University of Colorado BoulderBoulderUSA
  5. 5.University of VirginiaCharlottesvilleUSA

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