Instructor Rating Markets

Abstract

We describe the design of Instructor Rating Markets (IRMs) where human participants interact through intelligent automated market-makers in order to provide dynamic collective feedback to instructors on the progress of their classes. The markets are among the first to enable the empirical study of prediction markets where traders can affect the very outcomes they are trading on. More than 200 students across the Rensselaer campus participated in markets for ten classes in the Fall 2010 semester. In this paper, we describe how we designed these markets in order to elicit useful information, and analyze data from the deployment. We show that market prices convey useful information on future instructor ratings and contain significantly more information than do past ratings. The bulk of useful information contained in the price of a particular class is provided by students who are in that class, showing that the markets are serving to disseminate insider information. At the same time, we find little evidence of attempted manipulation by raters. The markets are also a laboratory for comparing different market designs and the resulting price dynamics, and we show how they can be used to compare market making algorithms.