The Uncommon Wisdom Podcast #26 | Robin Hanson | Prediction Markets
Apr 17, 2023
In a thought-provoking discussion, Robin Hanson, an economist at George Mason University and a research associate at Oxford's Future of Humanity Institute, dives into the fascinating world of prediction markets. He explains how these markets, designed to aggregate information, can serve as a 'tax on BS' by aligning incentives and revealing true beliefs. Robin shares innovative applications for these markets in policy decision-making, hiring practices, and navigating emerging technologies like AI. He also delves into the social barriers to their adoption and the psychological resistance to marketization.
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Prediction Markets As Information Aggregators
- A prediction market is a betting market designed to aggregate information rather than just gamble.
- It uses prices on event-contingent assets to reveal collective beliefs about outcomes.
From Hypertext To Betting Markets
- Robin recounts moving from hypertext and AI toward betting markets after seeing markets cut through bad arguments.
- He went 'all in' on betting markets and envisioned using them broadly rather than as small curiosities.
Markets Select For Persistent Specialists
- Prediction markets attract traders willing to persist where they can have impact, not random participants.
- Prices reflect the beliefs of specialists who repeatedly trade where they expect an edge.
