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Designs - Prediction market designs and other mechanism designs — Updated: 2008-06-12

1. Classic Market Design

CDA - Continuous Double Auction — Google search for "continuous double auction". — With or without automated market maker (AMM). (One can integrate a CDA with the AMM.)

Two Popular CDA Interfaces
- Level II (for stocks);
- Ladder (for futures).

Chris Hibbert's Explainers

PM Intro: Basic Formats - [simple double auctions] - by Chris Hibbert - 2005-12-30
PMs with Open-Ended Prices - [markets with open-ended prices] - by Chris Hibbert - 2006-01-05
Looking at Both Sides - [the symmetry of complementary purchases] - by Chris Hibbert - 2006-04-17
Market Design: Book and Market Maker - [how to integrate an order book with an automated market maker] - by Chris Hibbert - 2006-04-28
Increasing Liquidity in Multi-Outcome Claims - [the mechanics of multi-outcome markets] - by Chris Hibbert - 2006-07-19
Continuous Outcomes: Bands, Ladders, and Scaled Claims - [predicting the value of a continuous variable] - by Chris Hibbert - 2006-09-20
Integrating Book Orders and Market Makers - (mirror on MO) - by Chris Hibbert - 2006-09-20
Conditional and Combinatorial Betting - (mirror on MO) - by Chris Hibbert - 2007-03-06
Market Makers for Multi-Outcome Markets - (mirror on MO) - by Chris Hibbert - 2007-09-10

2. Advanced Designs

2.1. Market Scoring Rules - (MSR)

Robin Hanson - Robin D. Hanson - (George Mason U., Virginia, U.S.A.) — With or without automated market maker (AMM).

- Combinatorial Market Scoring Rules - (PDF) - 2003
- An Experimental Test of Combinatorial Information Markets - John Ledyard, Robin Hanson and Takashi Ishikida - (PDF) - 2005
- Combinatorial Market Scoring Rules - (PPT - PDF) - by Robin Hanson - 2005-12-19
- Modular Information Aggregation with Combinatorial Prediction Markets - (PPT file) - by Robin Hanson - 2007-06-06

- Implementing Hanson’s Market Maker - by David Pennock - 2006-10-30

- Soon here Abramowicz's paper

2.2. Dynamic Pari-Mutuel Market - (DPMM)

David M. Pennock - David Pennock - (Yahoo! Research Labs, California, U.S.A.)

- Dynamic pari-mutuel market - 2004 - (PDF - V1 - Waiting for V2??)

3. Betting Designs - (Non-Trading)

Scoring Rules

- Bernardo Huberman - (HP Labs U.S.A.) — BRAIN: software based on Scoring Rules (instead of CDA)
- NewsFutures — Competitive Forecasting & Idea Pageant

More Information

"Mechanism Designs" post category at the Midas Oracle blog

Disambiguation

The Products
- traded bets; traded predictions; event derivatives; event-driven derivatives; event derivative contracts; information derivatives; information derivative contracts.
The Markets
- bet markets; betting markets; event derivative markets; information derivative markets; prediction markets.
The Exchanges
- bet exchanges; betting exchanges; event derivative exchanges; information derivative exchanges; prediction exchanges.
The Technology
- market-based technology; trading engine; trading technology.
Other Terms
- binaries; binary, European call options; European binary options; binary event options; event futures; event-driven futures; idea futures; information futures.
Inappropriate Terms
- event markets; idea markets; information markets; opinion markets; predictive markets.
Sub-Categories of Prediction Markets
1. Decision markets are conditional prediction markets intended (by some idealists) to be used as a decision-making tool replacing human decision makers;
2. Decision-aid markets are conditional prediction markets intended to be used as a decision-aid tool advising human decision makers.

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