Prof. Dr. Christof Weinhardt

"The Power of Information in Markets"

In this talk I present and discuss the role and potential of information in various environments where electronic markets are used for coordination purposes. The potential power of information is illustrated in different application domains such as stock exchanges and prediction markets, service value networks, energy markets, and online auction platforms.

Starting from financial markets, information efficiency is shown as a key indicator for high market/service quality which can be enhanced by using automated trading facilities. Their impact is analyzed and central results are presented. Subsequently, as a special application of market models and their potential for information aggregation, the role of incentive systems in so-called prediction markets is analyzed. It is shown that the questions of how participants are incentivized and also how information is presented to them - i.e. monetary and non-monetary incentives- influence the quality of traded expectations and the traders´ payoff.

Focusing on a different scenario with asymmetric information, networked service providers that contribute to an overall value proposition - i.e. they compose complex services out of specialized service components - are analyzed. A coordination mechanism is presented that implements incentives to achieve truthful revelation policies as an optimal strategy for all service providers. Beyond that energy efficiency is gained by using market based mechanisms to aggregate information which is widely spread over the whole grid and used to coordinate production, consumption, and storage of electricity.

Switching the focus on online auction platforms such as eBay, the impact of information on irrational behavior of market participants is elaborated. Precisely, the impact of clock speed on seller´s revenue in a concrete auction format is analyzed and selected results are presented.