Predictive Market V2.0

Experimental Predictive Market 

Version 1 was a flop that had some very obvious flaws, mainly that the uplifitng mechanism over £10 would encourage people to buy all the stock and hold onto it for ever or I would have to intervene with an upper price limit. Plus why should a price change just because the day has changed.

Experimental Predictive Market The Rules V2.0

Main rules

• Each stock is a question i.e. "Workers in the UK should be given 1 extra bank holiday?".
• Each stock initially lists at a price of £10 with 1000 shares for sale (Numbers would change if it ever became really popular).
• Down Escalator - If no one buys the stock, the price will drop at a rate of 0.04p per day (the stock and therefore idea is unpopular). The idea is that the price of stock will drop until it finds the level at which people are willing to buy
• If someone buys stock the price rises at a rate of: 'Number of shares bought * 0.04p'.
• If someone sells stock the price falls at a rate of: 'Number of shares sold * 0.04p'.
• Trading limit of 100 shares per transaction.
• If price above £10.00 stock rises at a rate of 0.04p per day (Idea is popular and will keep rising until investors tempted to sell - Price will hopefully stabilise at the value of the idea) 
• If all shares are available for sale, the price gets on the "down escalator" again until the new "willing to buy" level is found
• If the stock reaches zero it is archived.

Liquidity Rules

•  Stock can only be held for 180 days - at the 180 day limit all stock is hold at list price
• At close of an event e.g. general election all stock is sold at list price

Futures Market

• As well as buying and selling shares you can make a futures bet on whether a certain price will be reached within the next seven days.
• You can only have one bet per stock per 7 day period
• If the price is reached you win the small amount.
• This gives an indication of whether people want to buy or sell. The more buyers in the market the higher the price will go, the more sellers in the market the lower the price will go.

I am sure there will be a new version along shortly when I find some flaws with this one.