Determination of odds in prediction markets : coexistence of posted-offer and double-auction designs

Abstract

This paper studies the coexistence of two competing mechanisms in the same market, where one follows the posted-offer rule and the other one incorporates a double-auction mechanism. We explore this coexistence within a sports betting example in which bettors are free to choose between a bookie (posted-offer market) and a betting exchange.

Keywords

• prediction markets
• posted-offer
• double-auction