arXiv subjects

José Ignacio Rivero-Wildemauwe

Publications and source records attributed to José Ignacio Rivero-Wildemauwe.

4 recordsLinked to original sources

arXiv2026

The Favorite-Longshot Bias in Prediction Markets: Evidence from Polymarket

The favorite--longshot bias (FLB) is one of the most persistent return patterns in betting markets, but its prevalence in modern prediction markets and its relation to recurrent longshot demand remain unclear. We study these questions in Polymarket, a large and increasingly important prediction market, using 588 million trades by 2.48 million accounts. In observed transaction flows, purchases below 10 cents lose 19.3 cents per dollar, while purchases at or above 90 cents earn 0.83 cents. How contracts are grouped changes the result: longshots lose 6.3 cents per dollar when each contract is weighted equally but gain 4.1 cents when related contracts are first grouped by parent event; the two-sided pattern is robust in Crypto and Politics but surprisingly absent in Sports. The top decile of accounts with the strongest past tendency to buy longshots accounts for 26.6 percent of next-month low-price purchases, but earns similar returns to others. The top decile of accounts with the strongest past tendency to buy favorites accounts for 15.1 percent of next-month high-price purchases but earns less than others. These findings provide evidence of an aggregate FLB on Polymarket, but its magnitude depends on how contracts are grouped.

econ.GN↗

arXiv2025

Social preferences or moral concerns: What drives rejections in the Ultimatum game?

Rejections of positive offers in the Ultimatum Game have been attributed to different motivations. We show that a model combining social preferences and moral concerns provides a unifying explanation for these rejections while accounting for additional evidence. Under the preferences considered, a positive degree of spite is a necessary and sufficient condition for rejecting positive offers. This indicates that social preferences, rather than moral concerns, drive rejection behavior. This does not imply that moral concerns do not matter. We show that rejection thresholds increase with individuals' moral concerns, suggesting that morality acts as an amplifier of social preferences. Using data from van Leeuwen and Alger (2024), we estimate individuals' social preferences and moral concerns using a finite mixture approach. Consistent with previous evidence, we identify two types of individuals who reject positive offers in the Ultimatum Game, but that differ in their Dictator Game behavior.

econ.TH↗

arXiv2025

Trade among moral agents with information asymmetries

Two agents trade an item in a simultaneous offer setting, where the exchange takes place if and only if the buyer's bid price weakly exceeds the seller's ask price. Each agent is randomly assigned the buyer or seller role. Both agents are characterized by a certain degree of Kantian morality, whereby they pick their bidding strategy behind a Veil of Ignorance, taking into account how the outcome would be affected if their trading partner adopted their strategy. I consider two variants with asymmetric information, respectively allowing buyers to have private information about their valuation or sellers to be privately informed about the item's quality. I show that when all trades are socially desirable, even the slightest degree of morality guarantees that the outcome is fully efficient. In turn, when quality is uncertain and some exchanges are socially undesirable, full efficiency is only achieved with sufficiently high moral standards. Moral concerns also ensure equal ex-ante treatment of the two agents in equilibrium. Finally, I show that if agents are altruistic rather than moral, inefficiencies persist even with a substantial degree of altruism.

econ.TH↗

arXiv2024

Doing the right thing (or not) in a lemons-like situation: on the role of social preferences and Kantian moral concerns

We conduct a laboratory experiment using framing to assess the willingness to ``sell a lemon'', i.e., to undertake an action that benefits self but hurts the other (the ``buyer''). We seek to disentangle the role of other-regarding preferences and (Kantian) moral concerns, and to test if it matters whether the decision is described in neutral terms or as a market situation. When evaluating an action, morally motivated individuals consider what their own payoff would be if -- hypothetically -- the roles were reversed and the other subject chose the same action (universalization). We vary the salience of role uncertainty, thus varying the ease for participants to envisage the role-reversal scenario.

econ.GN↗