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Summary: APPLIED
MATHEMATICS
POLITICAL
SCIENCES
Price dynamics in political prediction markets
Saikat Ray Majumdera,b
, Daniel Diermeiera,b
, Thomas A. Rietzc
, and Luís A. Nunes Amarala,d,1
a
Northwestern Institute on Complex Systems, Northwestern University, Evanston, IL 60208; b
Kellogg School of Management, Northwestern University, Evanston,
IL 60208; c
Henry B. Tippie College of Business, University of Iowa, Iowa City, IA 52242; and d
Department Chemical and Biological Engineering, Northwestern
University, Evanston, IL 60208b;
Edited by H. Eugene Stanley, Boston University, Boston, MA, and approved November 25, 2008 (received for review May 23, 2008)
Prediction markets, in which contract prices are used to forecast
future events, are increasingly applied to various domains rang-
ing from political contests to scientific breakthroughs. However,
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