Modeling Fixed Odds Betting For Future Event Prediction1
提出用固定赔率投注替代传统拍卖机制作为预测市场，通过信念-决策框架和混合贝塔分布建模投注者行为，实验表明该方法在多种场景下表现可比甚至更优。
Prediction markets provide a promising approach for future event prediction. Most existing prediction market approaches are based on auction mechanisms. Despite their theoretical appeal and success in various application settings, these mechanisms suffer from several major drawbacks. First, opinions from experts and amateurs are treated equally. Second, continuous attention from participants is assumed. Third, such mechanisms are subject to various forms of market manipulation. To alleviate these limitations, we propose to employ the classic fixed odds betting as an alternative prediction market mechanism. We build a structural model based on a belief–decision framework as the event probability estimator. This belief–decision framework models bettors’ beliefs with mixed beta distributions and bettors’ decisions with prospect theory. A maximum likelihood approach is applied to estimate the model parameters. We conducted experiments on three real-world betting datasets to evaluate our proposed approach. Experimental results show that fixed odds betting based prediction outperforms the reduced form models based on odds and betting results, and achieves a comparable performance with auction-based prediction markets. The results suggest the possibility of employing fixed odds betting as a prediction market in a variety of application contexts where the assumptions made by auction-based approaches do not hold.