## Archive for the ‘marketsw’ Category

### LMSR Implementation Notes, two

At the end of my previous post I mentioned some thoughts on dealing with more interesting initial states ($$q^0$$). We’ll define our initial state by choosing the amount of funds we’re willing to lose $$F$$, and a set of initial prices $$0 < p_i(q^0) < 1$$. Unless $$p_i(q^0) = \frac{1}{n}$$ for all $$i$$, we will […]

### LMSR Implementation Notes

Some additional notes on implementing Hanson’s Logarithmic Market Scoring Rule, based on David Pennock’s post from 2006. Usage is to is to pick $$n$$ distinct outcomes, such that exactly one will be true, and then to trade contracts that correspond with each outcome, so that if the outcome occurs the corresponding contract has a unit […]