Longshots , Overconfidence and Efficiency on the Iowa Electronic Market *

  title={Longshots , Overconfidence and Efficiency on the Iowa Electronic Market *},
  author={Joyce E. Berg and Thomas A. Rietz},
We study the forecast accuracy and efficiency of popular “binary” prediction markets. Such markets forecast probabilities for future states of the world (e.g., election winners) by paying off $0 or $1 depending on the realized state (e.g., who actually won). To assess accuracy, forecast probabilities must be compared to realization frequencies, not individual realizations. We use Iowa Electronic Market (IEM) data to test efficiency against two alternative propositions from behavioral finance… CONTINUE READING
3 Citations
15 References
Similar Papers


Publications referenced by this paper.
Showing 1-10 of 15 references

Wishes, Expectations and Actions: A Survey on Price Formation in Election Stock Markets,

  • R Forsythe, TA Rietz, TW Ross
  • Journal of Economic Behavior and Organization,
  • 1999

Anatomy of an Experimental Political Stock Market,

  • R Forsythe, FD Nelson, GR Neumann, J Wright
  • American Economic Review,
  • 1992

Anomalies: Parimutuel Betting Markets: Racetracks and Lotteries,

  • RH Thaler, WT Ziemba
  • The Journal of Economic Perspectives,
  • 1988
1 Excerpt

Similar Papers

Loading similar papers…