An example of what you are talking about is Domenico Nuti's idea of a "pari-mutual"
stock market: people would buy and sell stocks in socialist firms, and even make (or
lose) money off the transaction, but there would be no ownership rights or (if I recall
correctly) dividends. The whole point would be generating information, much like the
Iowa election thing.
I can't say I was too impressed with the idea, since problems would be sure to arise
from parallel and inconsistent structures: social ownership/control/management over
here and privately interested gambling over there. It would make the Black Sox look
saintly by comparison.
More generally, it is important to distinguish between different types of information
and different signalling effects of market prices. Doug referred to the problems of
markets whose payoff is based on anticipating what others will do a few weeks, or
nanoseconds, after you. There is also the question of whether we are interested in the
v's or pi's of our expected utility formulas (to wax neoclassical for a moment).
Perhaps these betting game are reasonable for probabilities, but not, I would think,
for valuations. Then there are the Hayekian (or M. Polanyi-ish) questions about
qualitatively different types of information.
I guess I'm saying that I would not rule out games and simulations of this kind (which
I use in class), but when we start getting specific it becomes clear that the
applications are limited and leave many problems unsolved.
So here's my question for you: can you suggest particular social issues for which a
more democratic society than ours might want to set up a wagering simulation?
Peter
Robin Hanson wrote:
> Instead, I wanted to discuss the much more limited question of whether betting
> markets do well at estimating the things that they bet on. This more limited topic
> is interesting for two reasons. First, it allows for relatively objective "horse
> races" that compare social institutions. And second, if progressives accepted that
> betting markets were as good at estimating as other known institutions, they might
> serve as a neutral forum for deciding many other important policy questions.
