# Conjunction and Disjunction Fallacies in Prediction Markets

- Michael Lee,
*University of California, Irvine*
- Emily Grothe,
*University of California, Irvine*
- Mark Steyvers,
*University of California, Irvine*

## Abstract

Prediction markets provide a mechanism for using groups of people
to determine the probability of events. We ask whether these probability
estimates, for logically related events, exhibit the irrationalities often found
in individual judgments. In particular, we explore combinations of markets that
provide tests of classic conjunction and disjunction fallacies. Across a number
of markets, asking about a wide variety of events, we find a few interesting
violations of probability theory, but mostly rational adherence. We discuss our
exploratory analyses in terms of the relationship between group and individual
probability estimation, and the effectiveness of prediction markets.

Back to Friday Posters