Law in Contemporary Society

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JuliaS-FirstPaper 14 - 14 Feb 2008 - Main.TheodoreSmith
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  * Picky point: the market prices reflect the public's expectation that the event will occur NOT the true expected probability of the event. -- JustinColannino - 12 Feb 2008
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>		 * I have to disagree with you, Justin. Of course they represent the public expectation of the event, but if economics works, this is equivalent to an expected probability... -- TheodoreSmith - 12 Feb 2008
 

What are they used for?

Though the idea of such markets is relatively simple, in reality they have staggering implications. As we will explore below, the markets incentivize people to invest based on their very best understanding of the future. By aggregating all this information, the market reflects the wisdom of the masses - wisdom which is proving to be remarkably reliable. Markets for the prediction of controllable social events encourage insiders to trade their information, enabling market analysts to foresee threats and risks. Prediction markets for the behaviors of financial markets offer speculators a potential means of hedging their losses when primary markets fail. Prediction markets for events that are communally controlled - like elections and economic activity - actually have the potential to make themselves come true. Some theorists even believe that prediction markets might be used for decision-making, by creating conditional markets which relate events with other variables.

Revision 14r14 - 14 Feb 2008 - 13:53:48 - TheodoreSmith
Revision 13r13 - 12 Feb 2008 - 19:13:18 - JustinColannino
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