Strictly Proper Mechanisms with Cooperating Players

Prediction markets provide an efficient means to assess uncertain quantities from forecasters. Traditional and competitive strictly proper scoring rules have been shown to incentivize players to provide truthful probabilistic forecasts. However, we show that when those players can cooperate, these mechanisms can instead discourage them from reporting what they really believe. When players with different beliefs are able to cooperate and form a coalition, these mechanisms admit arbitrage and there is a report that will always pay coalition members more than their truthful forecasts. If the coalition were created by an intermediary, such as a web portal, the intermediary would be guaranteed a profit.

• Publication year

  2011

• Venue

  Conference on Uncertainty in Artificial Intelligence

• Publication date

  2011-07-14

• Fields of study

  Business, Computer Science, Economics

• Identifiers
  arXiv 1202.3710
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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