System and method of making markets for a finite subset of orders placed across continuous and countably infinite outcome spaces
An improved system and method is provided for making markets for a finite subset of orders across continuous and countably infinite outcome spaces. To do so, a prediction market engine may be provided to support prediction markets by aggregating information about orders specifying a continuous subspace of a continuous outcome space and orders specifying a subset of a countably infinite set of outcomes. The pricing and/or quantities for orders received may be determined, a response may be sent to traders indicating the pricing or quantities of orders for payment, and the amount owed for accepted orders may be collected. Winning accepted orders may be identified and payout may be made for winning accepted orders. Advantageously, the present invention may support aggregation of more information from market participants in a prediction market to forecast the likelihood of the occurrence of a certain event.
1. A computer system for a prediction market, comprising:
a processor device performing as a prediction market engine providing services to support prediction markets aggregating information about orders placed on a continuous interval of a continuous outcome space by performing steps of:
receiving a plurality of orders from a plurality of traders, each order specifying a non-empty open continuous interval of the continuous outcome space;
determining prices of the orders to accept using a payout function of a continuous-outcome dynamic pari-mutuel market;
transmitting information to traders in the prediction market, said information comprising the quantities and the prices of the orders;
collecting amounts owed for the orders accepted by the traders;
identifying winning accepted orders;
determining winning amounts; and
paying out the winning amounts for the accepted orders; and
a storage operably coupled to the processor device storing the orders placed on the continuous intervals of the continuous outcome space.
2. The system of claim 1 further comprising an auctioneer engine operably coupled to the processor device, determining quantities for the orders placed on the continuous interval of the continuous outcome space.
3. A computer-readable medium having computer-executable components comprising the system of claim 1 .
4. A computer-implemented method of operating a prediction market, comprising:
using a processor device, performing steps of:
receiving a plurality of orders, each order specifying a non-empty open continuous interval of a continuous outcome space from a plurality of traders in the prediction market;
determining prices of the orders to accept using a payout function of a continuousoutcome dynamic pari-mutuel market;
transmitting information to the traders in the prediction market, said information comprising the quantities and the prices of the orders;
collecting an amount for the at least one order of the plurality of orders accepted from at least one trader of the plurality of traders;
identifying at least one winning accepted order;
determining winning amounts; and
paying out a winning amount for the at least one winning accepted order.
5. The method of claim 4 wherein determining the winning amounts comprises evaluating a pricing function of a continuous-outcome dynamic pari-mutuel market.
6. The method of claim 4 wherein determining the pricing further comprises evaluating a cost function of a continuous-outcome dynamic pari-mutuel market.
7. The method of claim 4 wherein paying out the winning amount for the at least one winning accepted order comprises evaluating the payout function of a continuous-outcome dynamic pari-mutuel market to determine the winning amount.
8. The method of claim 4 further comprising determining a quantity of the orders specifying the continuous interval of the continuous outcome space.
9. The method of claim 8 wherein determining the quantity of the orders comprises evaluating a cost function of a continuous-outcome dynamic pari-mutuel market.
10. A computer-readable medium having computer-executable instructions for performing the method of claim 4 .