[extropy-chat] The Economist on information markets: Guessing games

[Giu1i0 Pri5c0]

Economists and policymakers are just beginning to understand the use of
information markets
TALK is cheap, but money speaks the truth. That might be the credo
behind the recent, rapid rise in the use of novel markets to forecast
everything from political events to business successes and failures.
The theory is that the aggregated hunches of many people with money at
stake are likely to be more accurate than the opinion of disinterested
experts or of whoever happens to be at home when a pollster calls.
Indeed, it is easier to put your money where your mouth is in
information markets than in many "proper" markets. Because you can
"sell" without first "buying", short-selling, which is limited in many
financial markets, is essentially unconstrained. And because the bets
are smaller than in financial markets, participants are unlikely to be
prevented from backing their opinions by restrictions on borrowing.
There have been some efforts to use prediction markets to improve
public policy.
http://www.economist.com/printedition/displayStory.cfm?Story_ID=3400241