Self-financed wagering mechanisms for forecasting

We examine a class of wagering mechanisms designed to elicit truthful predictions from a group of people without requiring any outside subsidy. We propose a number of desirable properties for wagering mechanisms, identifying one mechanism--weighted-score wagering--that satisfies all of the properties. Moreover, we show that a single-parameter generalization of weighted-score wagering is the only mechanism that satisfies these properties. We explore some variants of the core mechanism based on practical considerations. Categories and Subject Descriptors J.4 [Social and Behavioral Sciences]: Economics General Terms Economics, Theory Keywords Group forecasting, mechanism design, prediction markets

• Type: Journal
• Year: 2008
• Where: SIGECOM
• Authors: Nicolas S. Lambert, John Langford, Jennifer Wortman, Yiling Chen, Daniel M. Reeves, Yoav Shoham, David M. Pennock
• Keywords: Desirable Properties, ECommerce, SIGECOM 2008, Truthful Predictions, Wagering