Optimization-based method for automated market making
Intellectual Property Status: Patent(s) Pending
Markets that deal in complex bets are highly inefficient and subject to arbitrage. Examples include sports betting (example: paramutual betting, where a bet can be made on "win", "place" or "show") or elections, where outcomes are not completely independent (ex: in the upcoming gubernatorial elections, what are the odds that a democrat wins in Florida and California, but loses in NY). This invention is a new method to operate markets of this type that is far more efficient and eliminates opportunities for arbitrage. Applications include:
• Predictive markets: Tool used by company to get a best guess of when a product will ship, by querying employees.
• Sports betting: enables more complex bets that are computationally intensive.
• Financial Markets: To operate financial markets (example: an options contract that a stock will trade in a range of $50 to $60). The benefit is making those markets operate more efficiently.