An In-depth Analysis of Information Markets with Aggregate Uncertainty

Publication Type

Journal Article

Publication Date

2006

Abstract

The novel idea of setting up Internet-based virtual markets, information markets, to aggregate dispersed information and predict outcomes of uncertain future events has empirically found its way into many domains. But the theoretical examination of information markets has lagged relative to their implementation and use. This paper proposes a simple theoretical model of information markets to understand their information dynamics. We investigate and provide initial answers to a series of research questions that are important to understanding how information markets work, which are: (1) Does an information market converge to a consensus equilibrium? (2) If yes, how fast is the convergence process? (3) What is the best possible equilibrium of an information market? and (4) Is an information market guaranteed to converge to the best possible equilibrium?

Discipline

Computer Sciences | E-Commerce | Operations and Supply Chain Management

Research Areas

Information Systems and Management

Publication

Electronic Commerce Research

Volume

6

Issue

2

First Page

201

Last Page

221

ISSN

1389-5753

Identifier

10.1007/s10660-006-6958-9

Publisher

Springer Verlag

Additional URL

http://dx.doi.org/10.1007/s10660-006-6958-9

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