Article: The double-auction gambling market: an experimental examination.(Institutional Change and Placing a Bet)(Report)

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Introduction

IN THIS PAPER, I COMPARE the information aggregating properties of new peer-to-peer gambling exchanges with more traditional bookmaking institutions. Economists have consistently found that sportsbooks predict the outcomes of sporting events with near perfect efficiency (Pankoff 1968; Woodland and Woodland 1994; Gray and Gray 1997). This finding is often marshaled to demonstrate the power of markets to utilize disparate and privately held information to make probabilistic predictions of uncertain outcomes.

However, this venerable institution is now facing competition from double-auction based "sports exchanges" that offer more ...

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