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Experimental Evaluation of Inventory-Based Discrete-Updating Market Maker for Intra-firm Prediction Market System Using VIPS

  • Hajime Mizuyama
  • Morio Ueda
  • Katsunobu Asada
  • Yu Tagaya
Part of the IFIP Advances in Information and Communication Technology book series (IFIPAICT, volume 338)

Abstract

This paper develops an intra-firm prediction market system as a collective-knowledge-based forecasting tool for a company and evaluates its performance through laboratory experiments. The system uses the variable-interval prediction security (VIPS) as the prediction security to be traded in the market and is controlled by an original computerized market maker suitable for the security type. The market maker evaluates each unit of VIPS with a Gaussian price distribution and updates the distribution intermittently through an inventory-based updating logic according to the transactions in the market. Laboratory experiments are conducted with a virtual demand forecasting problem to study whether the system functions properly as a subjective forecasting tool. The experiments confirm that the system is capable of penalizing arbitrage actions and hence its performance is fairly stable. Further, the output price distribution can serve as an approximate forecast distribution.

Keywords

Collective knowledge prediction markets demand forecasting information aggregation 

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Copyright information

© IFIP International Federation for Information Processing 2010

Authors and Affiliations

  • Hajime Mizuyama
    • 1
  • Morio Ueda
    • 1
  • Katsunobu Asada
    • 1
  • Yu Tagaya
    • 1
  1. 1.Department of Mechanical Engineering and ScienceKyoto UniversityKyotoJapan

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