Manipulation in Experimental Information Markets

by Robin Hanson, Ryan Oprea, and David Porter
George Mason University

Markets created to aggregate information on specific topics show great promise in laboratory experiments and field tests. Many are concerned, however, that if decision makers rely more on such markets, people might manipulate prices to influence decisions. This can occur in theoretical models, and attempts have been seen in the field. In laboratory experiments, we compare price accuracy when a market price influences a decision that subjects care about, to accuracy without such influence. We consider cases where ten of ten, and where three of ten, subjects each get an independent binary clue about a binary outcome. JEL: C92,D82,G14