Bluffing in Prediction Markets

General PPX Discussion

I'd like to point out this article http://www.physorg.com/news134920819.html based on this original paper: http://www.betforgood.com/events/pm2007/papers/manip.pdf .

It suggests that bluffing in a predictions market is a common and profitable strategy which defeats the purpose of the market, which is to make accurate predictions. Their suggested method for combating bluffing is to charge people who wish to change their bets.

Does this explain why the PPX market is often slow to come to the right prediction?

Would penalizing a switch from Buy to Short and vice versa work in a market where users are using multiple accounts (illegally)?

5 Comments

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pso7025

07/11/08 at 2:41 am

You do get "penalized" for switching from a buy to a short. You get charged $0.25 per share for selling/covering then another $0.25 for buying/selling. So are you saying that there should be more than a $0.25 commission for each share traded?

Also, why do you think users have multiple accounts?

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Ethan_57

07/11/08 at 8:09 am

because they have no life

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ejcassel

07/11/08 at 8:41 am

I agree with pso7025. PPX did not always have commissions, they were added to create the penalty for regularly flipping positions or bluffing to create wealth.

As for people having multiple accounts, one person decided to get rid of their accounts in another thread and listed the 3 accounts they had active. I'm sure he's not alone, although I believe there's little advantage to it, and it would eventually get caught.

ejcassel
http://www.ppxchat.com

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MarinePilot

07/11/08 at 11:44 am

It did work previously. We one had a class join PPX. There teacher was teaching them about the stock market. The kids actually got together (if I remember correctly 3-5 guys) opened multiple accounts. With the other accounts 12-15 they would purchase or sell stocks after previously selecting the correct way with the account they wanted to count. This drove prices and made it all very erratic. GPM1942 was able to track it.

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barakn

07/12/08 at 12:26 am

If there's a penalty, that's news to me. As I recall, there were commissions, then a lot of complaints, then they dropped commissions. I mostly stopped PPX trading after amassing about a million dollars. It's not about playing the market now, it's actually about making a prediction and sticking with it to the end.