Séminaire NANCY – Aurélien BAILLON (ERIM)

Détails de l'événement :

Titre : “Peer prediction markets to elicit unverifiable information” with Cem Peker and Sophie van der Zee

Abstract :

Prediction markets reward ex-post accuracy to incentivize agents to seek and reveal information. Some private signals, such as individual experiences or very long-run predictions, do not concern verifiable outcomes. In such cases, outcome-based rewards are not feasible. This paper presents peer prediction markets to elicit subjective judgments in binary questions of unverifiable information. Agents choose whether they receive a costly signal, which lead them to endorse either `yes’ or `no’ as an answer. Then, they either buy or sell a single unit of an asset at a price whose price is determined by endorsement rate of `yes’. The price of the asset is set at the prior expectation of the endorsement rate. We obtain a separating equilibrium, where agents buy or sell the asset as a function of their signal. Evidence from two experimental studies demonstrate that peer prediction markets motivate agents to seek costly information and reveal it.