Saturday, April 01, 2006

Information markets

The AEI-Brookings Joint Centre study:

Information Markets: A New Way of Making Decisions Robert W. Hahn (Editor), Paul C. Tetlock (Editor), Michael Abramowicz, Joyce E. Berg, Robin Hanson, John O. Ledyard, Thomas A. Rietz, Cass R. Sunstein, Justin Wolfers, Eric Zitzewitz. Books and Monographs 06-03. March 2006, is available online here.

Abstract: 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.

(Thanks Marginal Revolution. Cass Sunstein evaluates the pros and cons of information markets versus other methods of eliciting truth from large numbers of individuals here).

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