Suckers Are Born but Markets Are Made: Individual Rationality, Arbitrage, and Market Efficiency on an Electronic Futures Market

Kenneth Oliven
Kenneth Oliven
[email protected]
Henry B. Tippie College of Business, University of Iowa, Iowa City, Iowa 52242-1000
Search for more papers by this author
,
Thomas A. Rietz
Thomas A. Rietz
[email protected]
Henry B. Tippie College of Business, University of Iowa, Iowa City, Iowa 52242-1000
Search for more papers by this author

Kenneth Oliven

[email protected]

Henry B. Tippie College of Business, University of Iowa, Iowa City, Iowa 52242-1000

Search for more papers by this author

Thomas A. Rietz

[email protected]

Henry B. Tippie College of Business, University of Iowa, Iowa City, Iowa 52242-1000

Search for more papers by this author

Published Online:1 Mar 2004https://doi.org/10.1287/mnsc.1040.0191

Supplemental Material

mnsc.1040.0191-sm-oliven_rietz_3_04.pdf (53 KB)

Cited by
- How Market Prices React to Information: Evidence from Binary Options Markets
  10 June 2025 | The Economic Journal, Vol. 136, No. 673
- Mandatory CSR disclosure regulation and stock price synchronicity: evidence from a quasi-natural experiment
  10 January 2025 | Humanities and Social Sciences Communications, Vol. 12, No. 1
- The disciplinary role of options trading: Evidence from earnings manipulation
  International Review of Economics & Finance, Vol. 98
- Distilling wisdom of crowds in online communities: A novel prediction market constructed with comment posters
  Decision Support Systems, Vol. 180
- Does the left-digit bias affect prices in financial markets?
  Journal of Economic Behavior & Organization, Vol. 218
- Human-machine hybrid prediction market: A promising sales forecasting solution for E-commerce enterprises
  Electronic Commerce Research and Applications, Vol. 56
- Improving decisions with market information: an experiment on corporate prediction markets
  4 May 2020 | Experimental Economics, Vol. 24, No. 1
- Anomalies in Probability Estimates for Event Forecasting on Prediction Markets
  1 September 2020 | Production and Operations Management, Vol. 29, No. 9
- An Empirical Test of the Comey Effect on the 2016 Presidential Election
  23 September 2019 | Social Science Quarterly, Vol. 101, No. 1
- Repenser les modèles de rationalité de l’organisation digitale : vers une rationalité ordinaire réflexive
  Revue internationale de psychosociologie et de gestion des comportements organisationnels, Vol. Vol. XXV, No. 61
- A Test of the Modigliani‐Miller Invariance Theorem and Arbitrage in Experimental Asset Markets
  12 December 2018 | The Journal of Finance, Vol. 74, No. 1
- Markets Are Moral Spaces
  22 August 2019
- Longshots, overconfidence and efficiency on the Iowa Electronic Market
  International Journal of Forecasting, Vol. 35, No. 1
- Predicting the failures of prediction markets: A procedure of decision making using classification models
  International Journal of Forecasting, Vol. 35, No. 1
- How Can Corporate Prediction Markets Improve Manager Decisions? An Experimental Study
  SSRN Electronic Journal, Vol. 23
- Analyzing prediction market trading behaviour to select Delphi-experts
  7 August 2018 | foresight, Vol. 20, No. 4
- Market efficiency and the global financial crisis: evidence from developed markets
  Studies in Economics and Finance, Vol. 35, No. 3
- Pushing the future back: The impact of policy uncertainty on the market pricing of future earnings
  1 May 2018 | Journal of Business Finance & Accounting, Vol. 45, No. 7-8
- The effect of malicious manipulations on prediction market accuracy
  10 December 2015 | Information Systems Frontiers, Vol. 19, No. 3
- Information Markets
  7 October 2016
- Content as Community Regulator: The Recursive Relationship Between Consumption and Contribution in Open Collaboration Communities
  Gerald C. Kane,
  Sam Ransbotham
  6 September 2016 | Organization Science, Vol. 27, No. 5
- Wavelet decomposition of heterogeneous investment horizon
  4 March 2015 | Journal of Economics and Finance, Vol. 40, No. 4
- Starting points for a new researcher in behavioral finance
  International Journal of Managerial Finance, Vol. 12, No. 1
- Political uncertainty and the 2012 US presidential election: A cointegration study of prediction markets, polls and a stand-out expert
  International Review of Financial Analysis, Vol. 42
- Using prediction markets of market scoring rule to forecast infectious diseases: a case study in Taiwan
  11 August 2015 | BMC Public Health, Vol. 15, No. 1
- Fragmentation and stability of markets
  Journal of Economic Behavior & Organization, Vol. 119
- Information transparency in prediction markets
  Decision Support Systems, Vol. 78
- Integrating prediction market and Delphi methodology into a foresight support system — Insights from an online game
  Technological Forecasting and Social Change, Vol. 97
- Information Acquisition in Ostensibly Efficient Markets
  27 November 2014 | Economica, Vol. 82, No. 327
- A macroeconomic forecasting market
  25 July 2014 | Journal of Business Economics, Vol. 85, No. 3
- The role of surprise: Understanding overreaction and underreaction to unanticipated events using in-play soccer betting market
  Journal of Economic Behavior & Organization, Vol. 107
- Web vs. Mobile
  International Journal of E-Services and Mobile Applications, Vol. 6, No. 4
- Market Design, Manipulation, and Accuracy in Political Prediction Markets: Lessons from the Iowa Electronic Markets
  14 April 2014 | PS: Political Science & Politics, Vol. 47, No. 02
- User Heterogeneity in Trading Systems: Assessing Trader's Market Predisposition via Personality Questionnaires
- Presidential Elections and the Market Pricing of Future Earnings
  SSRN Electronic Journal, Vol. 40
- Prediction Markets in the Laboratory
  15 November 2013
- A Practical Liquidity-Sensitive Automated Market Maker
  1 September 2013 | ACM Transactions on Economics and Computation, Vol. 1, No. 3
- The role of task difficulty in the effectiveness of collective intelligence
- PREDICTION MARKETS IN THE LABORATORY
  18 February 2013 | Journal of Economic Surveys, Vol. 27, No. 3
- The Gates Hillman prediction market
  28 April 2013 | Review of Economic Design, Vol. 17, No. 2
- Do Prediction Markets Produce Well‐Calibrated Probability Forecasts?
  17 December 2012 | The Economic Journal, Vol. 123, No. 568
- Corporate prediction markets: a tool for predicting market shares
  25 January 2013 | Journal of Business Economics, Vol. 83, No. 3
- Fight or freeze? Individual differences in investors’ motivational systems and trading in experimental asset markets
  Journal of Economic Psychology, Vol. 34
- Ratings and Asset Allocation: An Experimental Analysis
  SSRN Electronic Journal, Vol. 6
- Fragmentation and Stability of Markets
  SSRN Electronic Journal, Vol. 58
- The Vicious Cycle: Fundraising and Perceived Viability in US Presidential Primaries
  1 January 2013 | Quarterly Journal of Political Science, Vol. 8, No. 1
- Efficiency and the Disposition Effect in NFL Prediction Markets
  11 November 2012 | Quarterly Journal of Finance, Vol. 02, No. 03
- Prediction Markets
- Tournament incentives and asset price bubbles: Evidence from a field experiment
  Economics Letters, Vol. 115, No. 2
- ‘It ain’t over till it's over.’ Yogi Berra bias on prediction markets
  Applied Economics, Vol. 44, No. 1
- The Role of Surprise: Understanding Over- and Underreactions Using In-Play Soccer Betting
  SSRN Electronic Journal, Vol. 57
- Three ways of linking laboratory endeavours to the realm of policies
  25 October 2011 | The European Journal of the History of Economic Thought, Vol. 18, No. 5
- A Quasi-Experimental Test of the Marginal Trader Hypothesis
  21 October 2011 | Kyklos, Vol. 64, No. 4
- Elections and political risk: New evidence from the 2008 Taiwanese Presidential Election
  Journal of Public Economics, Vol. 95, No. 7-8
- Intuitive Biases in Choice versus Estimation: Implications for the Wisdom of Crowds
  1 June 2011 | Journal of Consumer Research, Vol. 38, No. 1
- The wisdom of the few or the wisdom of the many? An indirect test of the marginal trader hypothesis
  25 June 2009 | Journal of Economics and Finance, Vol. 35, No. 2
- The Hows and Whys of Information Markets
- Gaming Prediction Markets: Equilibrium Strategies with a Market Maker
  28 May 2009 | Algorithmica, Vol. 58, No. 4
- New Product Development 2.0: Preference Markets—How Scalable Securities Markets Identify Winning Product Concepts and Attributes *
  15 October 2010 | Journal of Product Innovation Management, Vol. 27, No. 7
- Market structure and microstructure, in international interest rate futures markets
  Research in International Business and Finance, Vol. 24, No. 3
- Prediction without markets
  7 June 2010
- Automated market-making in the large
  7 June 2010
- A practical liquidity-sensitive automated market maker
  7 June 2010
- Preference Markets for Innovation Ranking and Selection
  Li Chen,
  Paulo Goes,
  Wynd Harris,
  James Marsden,
  John Zhang,
  30 December 2009 | Interfaces, Vol. 40, No. 2
- The Wisdom of Reluctant Crowds
- Memoirs of an Indifferent Trader: Estimating Forecast Distributions from Prediction Markets
  SSRN Electronic Journal, Vol. 24
- Efficiency and the Disposition Effect in NFL Prediction Markets
  SSRN Electronic Journal, Vol. 116
- Intuitive Biases in Choice vs. Estimation: Implications for the Wisdom of Crowds
  SSRN Electronic Journal, Vol. 27
- Algorithmic Trading in the Iowa Electronic Markets
  SSRN Electronic Journal, Vol. 1
- Longshots, Overconfidence and Efficiency on the Iowa Electronic Market
  SSRN Electronic Journal, Vol. 85
- Results from a Simple Prediction Contest
  SSRN Electronic Journal, Vol. 75
- Design and Use of Preference Markets for Evaluation of Early Stage Technologies
  8 December 2014 | Journal of Management Information Systems, Vol. 26, No. 3
- Contagion of Wishful Thinking in Markets
  Nicholas Seybert,
  Robert Bloomfield,
  12 February 2009 | Management Science, Vol. 55, No. 5
- Identification of Lead Users for Consumer Products via Virtual Stock Markets *
  23 March 2009 | Journal of Product Innovation Management, Vol. 26, No. 3
- Searching for Google's Value: Using Prediction Markets to Forecast Market Capitalization Prior to an Initial Public Offering
  Joyce E. Berg,
  George R. Neumann,
  Thomas A. Rietz,
  17 December 2008 | Management Science, Vol. 55, No. 3
- Is there an optimistic bias on betting markets?
  Economics Letters, Vol. 102, No. 2
- Sports forecasting: a comparison of the forecast accuracy of prediction markets, betting odds and tipsters
  5 September 2008 | Journal of Forecasting, Vol. 28, No. 1
- A literature review of electronic marketplace research: Themes, theories and an integrative framework
  5 June 2008 | Information Systems Frontiers, Vol. 10, No. 5
- Understanding trader heterogeneity in information markets
  Journal of Systems and Information Technology, Vol. 10, No. 2
- Complexity of combinatorial market makers
  8 July 2008
- Arbitrage Opportunities and Market-Making Traders in Prediction Markets
- Prediction market accuracy in the long run
  International Journal of Forecasting, Vol. 24, No. 2
- Prediction Markets: Prognosemärkte in Praxis und Theorie
  19 April 2016 | Review of Economics, Vol. 59, No. 1
- Chapter 80 Results from a Dozen Years of Election Futures Markets Research
- The Effect of Stock Endowments on the Liquidity of Prediciton Markets
  SSRN Electronic Journal, Vol. 18
- Searching for Google's Value: Using Prediction Markets to Forecast Market Capitalization Prior to an Initial Public Offering
  SSRN Electronic Journal, Vol. 41
- Bluffing and Strategic Reticence in Prediction Markets
- Preference Markets: Organizing Securities Markets for Opinion Surveys with Infinite Scalability
  SSRN Electronic Journal, Vol. 91
- An Analysis of Tradesports' 2005-06 National Football League Prediction Market
  SSRN Electronic Journal, Vol. 5
- Trading the Tradesports NFL Market: An Analysis of Liquidity and Pricing Efficiency
  SSRN Electronic Journal, Vol. 5
- Milestone Markets: Software Cost Estimation through Market Trading
- Information Markets: A New Way of Making Decisions
  SSRN Electronic Journal, Vol. 5
- Portfolio Choice and Asset Prices in an Economy Populated by Case-Based Decision Makers
  SSRN Electronic Journal, Vol. 84
- On the microstructure of price determination and information aggregation with sequential and asymmetric information arrival in an experimental asset market
  Annals of Finance, Vol. 1, No. 1

Volume 50, Issue 3

March 2004

Pages 281-424

Article Information

Supplemental Material

Metrics

Information

Received:July 22, 2002
Published Online:March 01, 2004

Cite as

Kenneth Oliven, Thomas A. Rietz, (2004) Suckers Are Born but Markets Are Made: Individual Rationality, Arbitrage, and Market Efficiency on an Electronic Futures Market. Management Science 50(3):336-351.

https://doi.org/10.1287/mnsc.1040.0191

Keywords

PDF download

Available Issues

Available Issues

Available Issues

Available Issues

Available Issues

Available Issues

Available Issues

Available Issues

Available Issues

Suckers Are Born but Markets Are Made: Individual Rationality, Arbitrage, and Market Efficiency on an Electronic Futures Market

Supplemental Material

Volume 50, Issue 3

Article Information

Supplemental Material

Metrics

Information

Cite as

Keywords

Sign Up for INFORMS Publications Updates and News