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<p>Mechanisms such as scoring rules and prediction markets can be used to incentivize truthful signal reporting and to aggregate signals. However, they are fundamentally limited by the fact that uncertainty should resolve. In this paper, we develop a mechanism, based on Bayesian markets, that incentivizes accuracy and aggregates information for unresolvable events. Participants decide whether to endorse a statement and trade an asset whose value depends on the endorsement rate. The respective payoffs of buyers and sellers indicate whose endorsement to trust. We demonstrate theoretically and illustrate empirically that “following the money” outperforms selecting the majority endorsement.</p>

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Follow the money, not the majority: A mechanism predicting unresolvable events

  • 期刊论文

  • 发表日期：

    2025年8月13日

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  • Aurélien Baillon,
  • Benjamin Tereick,
  • Tong V. Wang

摘要

Mechanisms such as scoring rules and prediction markets can be used to incentivize truthful signal reporting and to aggregate signals. However, they are fundamentally limited by the fact that uncertainty should resolve. In this paper, we develop a mechanism, based on Bayesian markets, that incentivizes accuracy and aggregates information for unresolvable events. Participants decide whether to endorse a statement and trade an asset whose value depends on the endorsement rate. The respective payoffs of buyers and sellers indicate whose endorsement to trust. We demonstrate theoretically and illustrate empirically that “following the money” outperforms selecting the majority endorsement.