Law Commons^™

Statement On Prediction Markets, Vernon L. Smith, Kenneth J. Arrow, Shyam Sunder, Robert Forsythe, Robert E. Litan, Eric Zitzewitz, Michael Gorham, Robert W. Hahn, Robin Hanson, Daniel Kahneman, John O. Ledyard, Saul Levmore, Paul R. Milgrom, Forrest D. Nelson, George R. Neumann, Marco Ottaviani, Charles R. Plott, Thomas C. Schelling, Robert J. Shiller, Erik C. Snowberg, Cass R. Sunstein, Paul C. Tetlock, Philip E. Tetlock, Hal R. Varian, Justin Wolfers

Vernon L. Smith

Prediction markets are markets for contracts that yield payments based on the outcome of an uncertain future event, such as a presidential election. Using these markets as forecasting tools could substantially improve decision making in the private and public sectors.

We argue that U.S. regulators should lower barriers to the creation and design of prediction markets by creating a safe harbor for certain types of small stakes markets. We believe our proposed change has the potential to stimulate innovation in the design and use of prediction markets throughout the economy, and in the process to provide information that will benefit …

Hedonic Damages, Hedonic Adaptation, And Disability, Samuel R. Bagenstos, Margo Schlanger

Vanderbilt Law Review

Over the past quarter century, the concept of "adaptive preferences" has played an important role in debates in law, economics, and political philosophy. As Professor Jon Elster has described this psychological phenomenon, "people tend to adjust their aspirations to their possibilities." A number of prominent scholars have argued that the existence of adaptive preferences "raises serious problems for neoclassical economics and for unambivalent enthusiasm for freedom of choice." Because our current preferences are constrained by the opportunities available to us, proponents of adaptive preference theory contend, those preferences may not be the best guide to what is in our interests; …

Comment: Experts Who Don't Know They Don't Know, Jonathan Koehler

Faculty Working Papers

Sadly, the conclusion reached by Green and Armstrong (2006) – that experts should not be used for predicting the decisions that people will make in conflicts – comes as no surprise. Decades ago, Armstrong himself taught us that expertise beyond a minimal level does not improve judgmental accuracy across a variety of domains (Armstrong, 1980). More recently, Tetlock (2006) drove home the point in a study of hundreds of political experts who made thousands of forecasts over many years. Like Green and Armstrong (2006), Tetlock (2006) found that that expert forecasts were frequently inaccurate. In a nod to Armstrong's previous …