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Robin Hanson on “-silly”- research topics:
[M]ost people think futarchy (government by [prediction] markets) is silly, even though most think it has a decent chance of performing well […].
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Decision markets and decision-aid markets are 2 great concepts pushed by Robin Hanson, the world’-s #1 researcher in the field of prediction markets. But they are just inventions, not innovations. What is important is to find out which population segment or which class of business executives find this stuff productive and helpful.
In that perspective, his presidential prediction markets at InTrade are good ideas, and the liquidity there (helped by an AMM) is decent enough. But they are just betting supports, right now. I haven’-t seen any opinion leaders taking them as a trusted source of information, which is the damn goal. We will see whether that comes true in the future.
If Robin Hanson were really serious in finding a killer app for his concept of decision-aid markets, he would of course come up with conditional prediction markets in the realm of sports, which is the most popular topic in the real-money prediction markets. Alas, I often have the impression that the academics in the field of prediction markets have profound disdain for sports prediction markets.
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Robin Hanson on seeking decision advice:
[…] We rarely seek out advice, and when we do it is usually on much smaller decisions. […] One reason we avoid getting advice is that it lowers our status relative to those who give advice. Of course this is also makes asking for advice a good way to flatter and supplicate. Not sure if this explains the puzzle though. But all this doesn’-t seem to bode well for fielding decision markets on the biggest organizational decisions.
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Allow me to digress from there. I think that the reading from the prediction markets is like an advice —-in that you have to accept the market message as an authority. If you are an expert with direct access to primary sources of information, I don’-t think you’-d rely on the message from the public prediction markets (which are information aggregation laggards). The big mistake from Robin Hanson and the others has been to sell the public prediction markets as tools for the decision makers. That could happen, but marginally, I believe. Experts and decision makers will firstly want to rely on their primary sources of information and on their analysis.
I think that the population segment which is the more likely to appreciate the consumption of market-generated probabilities would be composed of people who want a chopper view of world events. Prediction market journalism should satisfy this dashboard need.
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[Please note that the thoughts expressed above refer to the public prediction markets (as stated in the post title –think BetFair-TradeFair, InTrade-TradeSports, Betdaq, HubDub, NewsFutures, and Hollywood Stock Exchange) —not the enterprise prediction markets, which is a horse of another color.]
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Robin Hanson on decision-aid markets:
I don’-t recall ever turning down a chance to consult on prediction markets for a Fortune-500 company. If you know of an opportunity that I’-m missing, do let me know.
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Doc, are there more Fortune-500 executives and managers attending a conference on extra-terrestrials or a conference on finance? 
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