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Understanding the Plott-Wit-Yang paradox
- 1.0349763 - NHU-C 2011 GB eng J - Journal Article
Kálovcová, Katarína - Ortmann, Andreas
Understanding the Plott-Wit-Yang paradox.
Journal of Prediction Markets. Roč. 3, č. 3 (2009), s. 33-44. ISSN 1750-6751
R&D Projects: GA MŠMT LC542
Institutional research plan: CEZ:AV0Z70850503
Keywords : experimental betting markets * private information * information aggregation
Subject RIV: AH - Economics
Plott, Wit & Yang (2003) conduct a betting market experiment and find:First, information was aggregated. This suggests that traders updated their private information based on observed market odds. Second, a model based only on the use of private information seems to fit their data best. The authors call this paradoxical. Because the original data are lost, we replicate their experiment. Our results suggest that the paradox seems due to aggregate rather than individual level data analysis. We analyze the individual level data and explain the paradoxical results reported in Plott et al. (2003).
Permanent Link: http://hdl.handle.net/11104/0189916
Number of the records: 1