Information Markets: A New Way of Making Decisions
Robert William Hahn, Paul C. Tetlock
AEI-Brookings Joint Center for Regulatory Studies, 2006 - Business & Economics - 201 pages
Information markets are markets for contracts that yield payments based on the outcome of an uncertain future event. They are used to predict a wide range of events, from presidential elections to printer sales. These markets frequently outperform both experts and opinion polls, and many scholars believe they have the potential to revolutionize policymaking. At the same time, they present a number of challenges. This collection of essays provides a state-of-the-art analysis of the potential impact of information markets on public policy and private decision-making. The authors assess what we really know about information markets, examine the potential of information markets to improve policy, lay out a research agenda to help improve our understanding of information markets, and explain how we might systematically improve the design of such markets.
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accuracy accurate aggregate information announcement approach arbitrage auction behavior beliefs benefits betting biases bidder Bush candidate Charles Plott Copenhagen Consensus costs create decision deliberating groups deliberative Democratic effect Eight-Event Environments election markets equilibrium Eric Zitzewitz errors estimate example experiments forecasting Forsythe foul play full-information group members Ibid IEM markets IEM prices implemented increase individual information aggregation Information Cascades information markets institutions Iowa Electronic Markets James Surowiecki Journal of Economic Joyce Berg judgments Justin Wolfers Kerry KL Distances liquidity manipulation market designs market prices market scoring rule market-maker mation markets nomination outcomes parimutuel betting participants percent Policy Analysis Market policymakers polls posterior potential prediction markets predictors probability problem queue rational expectations release relevant reveal information risk Robin Hanson securities social Stock Market suggested Sunstein Thomas Rietz Three-Event Environments tion TradeSports vaccination vote share vote-share winner-takes-all Wolfers and Zitzewitz World Bank