456 research outputs found
Partition-dependent framing effects in lab and field prediction markets
Many psychology experiments show that individually judged probabilities of the same event can vary depending on the partition of the state space (a framing effect called "partition-dependence"). We show that these biases transfer to competitive prediction markets in which multiple informed traders are provided economic incentives to bet on their beliefs about events. We report results of a short controlled lab study, a longer field experiment (betting on the NBA playoffs and the FIFA World Cup), and naturally-occurring trading in macro-economic derivatives. The combined evidence suggests that partition-dependence can exist and persist in lab and field prediction markets
Competitive Prediction-Aware Online Algorithms for Energy Generation Scheduling in Microgrids
Online decision-making in the presence of uncertain future information is
abundant in many problem domains. In the critical problem of energy generation
scheduling for microgrids, one needs to decide when to switch energy supply
between a cheaper local generator with startup cost and the costlier on-demand
external grid, considering intermittent renewable generation and fluctuating
demands. Without knowledge of future input, competitive online algorithms are
appealing as they provide optimality guarantees against the optimal offline
solution. In practice, however, future input, e.g., wind generation, is often
predictable within a limited time window, and can be exploited to further
improve the competitiveness of online algorithms. In this paper, we exploit the
structure of information in the prediction window to design a novel
prediction-aware online algorithm for energy generation scheduling in
microgrids. Our algorithm achieves the best competitive ratio to date for this
important problem, which is at most where
is the prediction window size. We also characterize a non-trivial lower
bound of the competitive ratio and show that the competitive ratio of our
algorithm is only away from the lower bound, when a few hours of
prediction is available. Simulation results based on real-world traces
corroborate our theoretical analysis and highlight the advantage of our new
prediction-aware design.Comment: This paper has been accepted into ACM e-Energy 2022 and will appear
in the conference proceeding
Jeffreys's law for general games of prediction: in search of a theory
We are interested in the following version of Jeffreys's law: if two
predictors are predicting the same sequence of events and either is doing a
satisfactory job, they will make similar predictions in the long run. We give a
classification of instances of Jeffreys's law, illustrated with examples.Comment: 12 page
Extracting Valuable Data from Classroom Trading Pits
Edward Chamberlin, who initiated classroom market experiments, used the results of these experiments to argue that competitive equilibrium performs poorly in explaining the outcomes of real markets. Vernon Smith altered the design of Chamberlin's experiment to increase the amount of price information available to traders and in classroom experiments with this design found that trading outcomes were close to those predicted by competitive theory. This paper examines results of classroom trading experiments using the design found in Experiments with Economic Principles, an introductory economics text by Ted Bergstrom and John Miller. The procedure in this experiment is intermediate between that of Chamberlin and that of Smith. We have collected data on transaction prices and quantities from a large number of classroom experiments using this design. We compare the experimental outcomes with the predictions made by competitive equilibriumtheory and by a simple profit-splitting theory. Evidence suggests that neither theory is entirely successful, though in the first rounds of trading there seems to be a significant amount of profit-splitting and as traders become more experienced, outcomes are closer to those predicted by competitive theory.experimental economics, classroom experiments, Edward Chamberlin, Vernon Smith, trading pits, demand and supply, profit- splitting, random matching, excess trading
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