In practice, scoring rules elicit good probability estimates from individuals, while betting markets elicit good consensus estimates from groups. Market scoring rules combine these features, eliciting estimates from individuals or groups, with groups costing no more than individuals.

June 2003Does the preopening period facilitate price discovery? An experimental investigation Price discovery at the opening of the market is a delicate and crucial time in the trading day. To facilitate price discovery at the opening, several exchanges have introduced a peopening period. Indicative prices formed during this period could facilitate price discovery by helping investors figuring out the new equilibrium and determining their optimal strategies. On the other hand, since there are no actual trades until the opening of the market, investors could be tempted to manipulate prices. To test these hypotheses, we will run several experimental financial markets under two treatments: In the first treatment, the price is set in a call auction. In the second treatment, there is a preopening period before the call auction. Comparing the informational efficiency of prices and the convergence of order placement strategies to equilibrium in these treatments will shed light on whether the preopening period is useful for price discovery. To obtain clear-cut predictions, we will design the experiment so that the Milgrom and Stokey (1982) theorem applies: investors start the game with private signals, and cash