Computing Equilibria of Prediction Markets via Persuasion
Computer Science and Game Theory
2020-09-09 v1
Abstract
We study the computation of equilibria in prediction markets in perhaps the most fundamental special case with two players and three trading opportunities. To do so, we show equivalence of prediction market equilibria with those of a simpler signaling game with commitment introduced by Kong and Schoenebeck (2018). We then extend their results by giving computationally efficient algorithms for additional parameter regimes. Our approach leverages a new connection between prediction markets and Bayesian persuasion, which also reveals interesting conceptual insights.
Keywords
Cite
@article{arxiv.2009.03607,
title = {Computing Equilibria of Prediction Markets via Persuasion},
author = {Jerry Anunrojwong and Yiling Chen and Bo Waggoner and Haifeng Xu},
journal= {arXiv preprint arXiv:2009.03607},
year = {2020}
}