Law Commons^™

Government Prediction Markets: Why, Who, And How, Tom W. Bell

Tom W. Bell

This paper describes how prediction markets can make governments smarter, cheaper, and more responsive to changing conditions. A prediction market resembles a stock exchange where traders buy and sell not shares of companies, but claims about future events. Academic and commercial use of prediction markets suggests that they offer a useful tool for encouraging, collecting, and quantifying widely scattered expertise. Government administrators have begun experimenting with prediction markets, too. Many questions remain, however, about the proper way to implement government prediction markets. This paper opens with a brief survey of the costs and benefits of government prediction markets. It then …

Commentary On Predicting Crime, Tom Bell

Tom W. Bell

The market mechanisms proposed in Predicting Crime offer many virtues. The authors describe several of these—unbiased information collection; incentives that encourage disclosure; opinions weighted by conviction; information aggregation; instantaneous and continuous feedback—and convincingly argue that these structural features stand to help prediction markets outperform alternative institutions in forecasting the interplay of crime rates and crime polices. In that, Predicting Crime adopts an economic point of view and speaks in terms of practical experience. After all, similar structural features have already appeared in other successful prediction markets, such as those offering trading in claims about the weather, flu outbreaks, or box …

Prediction Markets For Promoting The Progress Of Science And The Useful Arts, Tom W. Bell

Tom W. Bell

Copyrights and patents promote only superficial progress in the sciences and useful arts. Copyright law primarily encourages entertaining works, whereas patent law mainly inspires marginal improvements in mature technologies. Neither form of intellectual property does much to encourage basic research and development. Essential progress suffers.

Prediction markets offer another way to promote the sciences and useful arts. In general, prediction markets support transactions in claims about unresolved questions of fact. A prediction market specifically designed to promote progress in the sciences and useful arts - call it a scientific prediction exchange or SPEx - would support transactions in a variety …