I had earlier written :
> ... 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.
Peter Dorman wrote:
>I've been thinking about this for a while ...
>Betting markets make sense when (a) there are severe problems of incentive
>compatibility among analysts, or (b) the problem is essentially one of
>aggregating vast
>amounts of private information. ...
>(a) Sometimes analysts are sufficiently biased ... there is something to
>be said
>for an analytical mechanism that gives people an overriding incentive to
>be accurate.
>(b) ... classical Hayekian problem. Each of us has a particular bit of
>insight ...
>Here the chief limitation is the one-dimensionality of the market
>aggregation ...
>But what about situations in which all of the relevant information is
>already public,
>and the disagreement centers on how to interpret that information? ... A
>single
>skillful interpreter ... is going to be more reliable than a market
>aggregation ...
>I would go with, say, Walter Dean Burnham rather than the Iowa election
>bettors any
>day, or Martin Carnoy (biases and all) rather than Robin's education
>reform bettors.
OK, but picking one analyst can't really serve as an ideologically neutral
forum, right? Typically, people will disagree on who are the best analysts.
So if we as a society want a neutral institutional forum in which we decide
which analysts we will rely on, then we want something else.
How to best interpret data, and who the best analysts are, are subjects that
people have different information on, just as they do regarding different
data. If we want to give people incentives to be careful and honest in
aggregating this other information, we might again consider betting markets.
Put another way, if everyone agreed with you about who the best analyst is,
then a betting market would just parrot that analysts opinions. But if
people disagree about who the best analyst is, then a betting market might
give people good incentives to be honest with themselves about who to rely on.
The dimensionality issue can be addressed by creating a market for each
important dimension, or by a new form of government with one dominant
"national welfare" policy dimension (http://hanson.gmu.edu/futarchy.html).
Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030-4444
703-993-2326 FAX: 703-993-2323
