We introduce a model of prediction markets that uses opinion dynamics as its underlying mechanism for price formation. We base the opinion dynamics on the Deffuant model of bounded rationality. We have used this model to show that price formation in prediction markets can be robustly explained by opinion dynamics, and that the model can also explain phase transitions depending on just two parameters.
This is a companion discussion topic for the original entry at https://www.comses.net/codebases/ad846d74-f1a0-408d-87e6-c13dc9dfc8c7/releases/1.0.0