Prediction Markets: A Tool for Accurate Beliefs

When invented the concept of prediction markets almost thirty years ago, he felt he had stumbled on a concept with huge implications. By allowing people to bet on the likelihood of future events, prediction markets promise to allow better forecasts and better decision making.

Research into the area has been vibrant, culminating in Hanson’s concept of Futarchy: A prediction-market based governance system. At the same time, the real-world applications have been few and far.

Hanson, an associate professor of economics at George Mason University, joined us to discuss his invention, futarchy and the challenges of disruptive technology.

Topics covered in this episode:

• How prediction markets can surface information
• The history of prediction markets
• How futarchy works
• Whether futarchy could settle the blocksize debate
• Why prediction markets failed to get wide adoption
• How Bitcoin is facing a similar adoption challenge

Episode links:

• Science 'The Promise of Prediction Markets' (PDF)
• Futarchy: Vote Values, But Bet Beliefs
• Robin Hanson's Blog Overcoming Bias

This episode is hosted by Brian Fabian Crain and Meher Roy. Show notes and listening options: epicenter.tv/098