Law in Contemporary Society

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JuliaS-FirstPaper 4 - 11 Feb 2008 - Main.JuliaS
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What are prediction markets?

How do they work?

What are they used for?

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>		 Forecasting, decision-making, risk management
 

What is information aggregation?

Prediction Markets and Judicial Decisions

Markets for Criminal Trials

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>		 Consider the markets for
 

Speculating about Guilt

Speculating about Verdicts

Speculating about Speculating

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"Matters of Law"

Law by Consensus

Markets as Judges/Juries

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>		 Imagine if, instead of juries, we create a prediction market for trial verdicts. We post a transcript of the trial online and allow people to buy shares of the outcome they think is correct. We announce the date that the market will expire, and on that date we enter whatever verdict has a higher value in the market. As an investor, you have a financial interest in accurately predicting what other people will think the verdict should be. The market mechanism here performs essentially the exact same function as the "reasonable man" standard we employ in much of our legal decision-making, by incentivizing investors to figure out how the average person will interpret the case. By extension, it creates an incentive for investors to advocate for their position - the more people who agree with you, the more your shares are worth. Imagine if the prediction market had a talk page associated with it, giving investors the opportunity to argue for their positions on the case. The market could potentially fulfill the role of attorneys as well as juries by providing financial incentive for effective advocacy.
 

Prediction Markets for World Events

Incentives for Sharing Information

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 Wolfers Paper: http://www.nber.org/papers/w10504 Times Article: http://www.time.com/time/magazine/article/0,9171,1118373-1,00.html Hanson Theory: http://hanson.gmu.edu/futarchy.html
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>		Berg Paper: http://www.springerlink.com/content/u2j52696120vx423/ (Conditional Markets)
 


Revision 4r4 - 11 Feb 2008 - 06:03:37 - JuliaS
Revision 3r3 - 11 Feb 2008 - 00:42:43 - JuliaS
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