# Using Financial Instruments to Transfer the Information Security Risks
## 8 Evaluation
### Carry out Evaluation
#### 8.3.2 Manipulation Resistant  
The ultimate aim of information elicitation and aggregation is to assist and improve the decision-making process. However, if the decisions are to be made by the information conveyed by ISPM, some market participants may have incentives to manipulate the ISP prices to achieve their desired outcomes. Shi _et al._ examined the settings where traders in a prediction market may have an ability to influence the outcome [124]. They showed how to derive scoring rules that do not incentivize the traders to take undesirable actions. However, information elicitation is not explicitly used for decision making. Dimitrov and Sami investigated the incentives problem when there is two markets (contract) for different but related events [125]. They explained the prediction markets manipulations as an effect of conflicting incentives and modeled a situation where a trader's behavior in one market (contract) could influence the trading decision of another trader in a second market (contract). In the given situation, the payoff from the first market (contract) is not dependent on the decisions made traders in the second market (contract), but the first trader gets the direct benefit from the decisions made by other traders. As similar conflicting incentive situations can occur in ISPM as well; the ISP prices and ISPM are exposed to such manipulations.  
Furthermore, like in other prediction markets, the traders trading ISD in ISPM may have \"favorite long short bias\" and may create \"speculative bubbles\". A favorite long short bias occurs when traders overestimate the probability of unlikely event outcomes and underestimate the probability of very likely outcomes, thus reflected in market prices. A speculative bubble may occur when a large size and number of trades drive up the instrument price without any justified information. These bubbles may falsely signal the occurrence or non-occurrence of the underlying event in the future. As this happens in other asset markets, there is no reason to believe that ISD and ISPM will be immune to this. However, strict regulations and adequate compliance policy can minimize its impact.  
On the other hand, Rhode and Strumpf reported that attempts to manipulate prediction and betting markets generally failed [126]. Further, they reported that beyond a short period, it becomes different and expensive to manipulate prediction markets. Moreover, Hanson and Opera reported that an attempt to manipulate the market price can create additional liquidity in the market and can be a substitute of traders' irrationality to produce information (prediction) market equilibrium [127]. As the ISPM will be a regulated market with strict policy of trader verification and fixed trading limits assigned according to their risk profile, the traders in ISPM will have limited capital to attempt price manipulation. This price manipulation attempt will be a source of additional liquidity and rational traders with soon attempt to correct the market price. Thus, the scope and impact of manipulation in ISPM is limited in nature.