Join Larry Samuelson, from Yale, for this week's Economic and Computer Science Seminar
16:00 - 17:30
Economics Common Room 5B.307
Lectures, talks and seminars
Economics, Department of
In this Economics and Computer Science seminar Larry Samuelson, from Yale discusses his paper on The Wisdom of a Confused Crowd: Model Based Inference
"Crowds" are often regarded as ``wiser'' than individuals, and prediction markets are often regarded as effective methods for harnessing this wisdom. If the agents in prediction markets are Bayesians who share a common model and prior belief, then the no-trade theorem implies that we should see no trade in the market. But if the agents in the market are not Bayesians who share a common model and prior belief, then it is no longer obvious that the market outcome aggregates or conveys information. In this paper, we examine a stylized prediction market comprised of Bayesian agents whose inferences are based on different models of the underlying environment. We explore a basic tension---the differences in models that give rise to the possibility of trade generally preclude the possibility of perfect information aggregation.