The Design and Testing of Information Aggregation Mechanisms: A Two-Stage Parimutuel IAM

The research reported here is focused on the design of new information aggregation mechanisms. These are competitive processes designed for collecting and aggregating dispersed information held in the form of impression and belief, that might otherwise be impossible to get. The research explores alternative institutional forms of IAMs and how they work. That specially designed markets can aggregate information is well documented in the literature as are the problems encountered when parimutuel-type systems are employed in an information aggregation capacity. This research is focused on new mechanisms, unlike any found evolving naturally, which mitigate these problems. These new mechanisms speed the process through which information is revealed, reduce deceptive behavior and reduce the instances of substantially incorrect aggregation (i.e., bubbles). The paper finds that a special, “two-stage” parimutuel mechanism is an improvement over previously studied parimutuel mechanisms. The two-stage parimutuel, on average, makes a prediction closer to that predicted using all available information. The mechanism suffers from fewer mirages (bubbles) than do previous parimutuel structures and it produces indicators for assessing the reliability of the information produced

Design Improved Parimutuel-type Information Aggregation Mechanisms: Inaccuracies and the Long-Shot Bias as Disequilibrium Phenomena

Information Aggregation Mechanisms (IAMs) based on parimutuel-type betting systems can aggregate information from complex environments. However, the performance of previously studied systems leaves something to be desired due to possible bluffing, strategic timing of decisions and a so called long shot bias. This paper demonstrates that two modifications of parimutuel systems improve information aggregation performance by removing disinformation due to strategic behavior and by removing misleading disequilibrium behavior. The experiments also demonstrate that the so called long shot bias results from disequilibrium behavior as opposed to having roots in the psychology of the individuals

Minority Rights in Majoritarian Institutions

The House of Representatives is, fundamentally, a majoritarian institution. A simple majority can do anything it wants, even changing the entire rules of the House through the Constitutional provision that "Each House shall determine the Rules of its Proceedings." Despite this power, the House has maintained extensive parliamentary rights for the minority party. This work examines why the Majority may allow the Minority a continued role in lawmaking. The historical development of the House rules is examined and compared to current practices in the House. This leads to an understanding of how the House became the institution it is today. The House rules evolved slowly over its first century, until finally arriving at the surprisingly stable set of modern rules. Although some of the changes the House has made appear strange at first sight, the models developed here explain many of them. Having identified key features of the rules of the House, a model of a legislature is constructed. Consideration of bills can be described as endogenous agenda formation -- each action that the legislature takes is proposed by a legislator. This process is modeled as a game, where the legislature's rules describe an agenda tree. Even minimal assumptions about the rationality of legislators provide predictions about how bills will be modified by the amendment tree. These floor consideration models, however, only predict what bills the legislature will pass for a given set of rules. To understand how the rules of the House developed, the modeled legislature is permitted to choose its rules (which amendment tree it will use). If the bill has been exogenously identified, so the legislature is choosing a special rule for the bill, the amendment tree it adopts will restrict the proposers. If the bill will be proposed endogenously, the legislature will adopt standing rules resembling those of the House. Further predictions are generated by combining this model with specific assumptions: depending on the type of issue being considered, certain rules should never be adopted. This analysis suggests that the House generally does not consider one-dimensional or distributive issues, but instead must deal with multi-faceted issues.</p

The design of improved parimutuel-type information aggregation mechanisms: Inaccuracies and the long-shot bias as disequilibrium phenomena

Information aggregation mechanisms (IAMs) based on parimutuel-type betting systems can aggregate information from complex environments. However, the performance of previously studied systems is imperfect due to possible bluffing, strategic timing of decisions, and “long-shot bias”. This paper demonstrates two modifications of parimutuel systems that improve information aggregation performance by removing disinformation due to strategic behavior and by removing misleading disequilibrium behavior. These experiments also demonstrate that “long-shot bias” results from disequilibrium behavior as opposed to being inherent in the psychology of the individuals

The design of improved parimutuel-type information aggregation mechanisms: Inaccuracies and the long-shot bias as disequilibrium phenomena

Information aggregation mechanisms (IAMs) based on parimutuel-type betting systems can aggregate information from complex environments. However, the performance of previously studied systems is imperfect due to possible bluffing, strategic timing of decisions, and "long-shot bias". This paper demonstrates two modifications of parimutuel systems that improve information aggregation performance by removing disinformation due to strategic behavior and by removing misleading disequilibrium behavior. These experiments also demonstrate that "long-shot bias" results from disequilibrium behavior as opposed to being inherent in the psychology of the individuals.Information aggregation Parimutuel Forecasting