Prediction Markets

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In inseptial domains, a right the fellow really matters much less than a payoff. So when we talk about prediction markets, people think that prodiction markets hedge you. They don't hedge you. A prodiction market is a binery. And and an exposure is often ended. Life is open ended, and life is often end. It's very lo it's very deep. Because i i think i had the same thought about the civil war. The civil war, i think people thought it was going to last two weeks. But if they had had a little bit of imaginings...they might have had some second thoughts exact.

Nassim Taleb of NYU-Poly talks with EconTalk host Russ Roberts about his recent paper (with Constantine Sandis) on the morality and effectiveness of "skin in the game." When decision makers have skin in the game--when they share in the costs and benefits of their decisions that might affect others--they are more likely to make prudent decisions than in cases where decision-makers can impose costs on others. Taleb sees skin in the game as not just a useful policy concept but a moral imperative. The conversation closes with some observations on the power of expected value for evaluating predictions along with Taleb's thoughts on economists who rarely have skin in the game when they make forecasts or take policy positions.