Take a look at my market called Petersburg’s Payout http://www.inklingmarkets.com/market/show/2063 (based upon the Petersburg Paradox).
This is my first market, and it is a test of a classic puzzle.

Do you think the payout is set up reasonably? I mean, theoretically the payout is infinite. But there’s a 50% chance the payout will be $2. I guess the proof will be in the wisdom of the crowd.

Description:

I will flip a coin until it comes up heads. Tails pays nothing. But if it comes up heads the first time, I will pay Paul $2. If it comes up heads the 2nd time, I will pay Paul $4. If it is the 3rd time, Paul gets $8. If it is the 4th time, Paul gets $16 and so on until heads comes up. How much will you be willing to pay Paul to take his place in the Petersburg Payout game?

Looks like the payout should be PER SHARE. I’ll adjust the wording. Is it correct that I can offer the payout on a PER SHARE basis? For example, if heads comes up on the 3rd try, that means a payout of $8. And can I make that $8 per share?

That’s pretty much the way it works. When the market is closed you create a per-share value, and owners of the shares get that amount.

As another comment you might want to set it higher (maybe $20 or so). Adjusting the value will mainly change the volatility to utility ratio.

For example, if I think $5 is a good amount, I can’t invest very much in it before it is worth more than $5. This means the returns for those expecting a small number of coin flips is not worth the time it takes to click on your stock. If it were $20 for the first flip, and I think $50 is a good amount, then far more money can be invested before the stock is bumped over $50 making it more worthwhile.