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PredictocracyMarket Mechanisms for Public and Private Decision Making$
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Michael Abramowicz

Print publication date: 2008

Print ISBN-13: 9780300115994

Published to Yale Scholarship Online: October 2013

DOI: 10.12987/yale/9780300115994.001.0001

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(p.282) Chapter 10 Predictocracy

Michael Abramowicz

Yale University Press

This chapter emphasizes that institutions evolve slowly and that although they may evolve too slowly, this does not justify radical change. The chapter considers two new prediction market designs: first, the market web, which could integrate and relate various prediction markets to one another; and second, self-resolving prediction markets, which forecast only their own predictions. The chapter considers John Maynard Keynes's famous comparison of markets to a beauty pageant to explain why self-resolving prediction markets could produce reasonable decisions. The chapter makes a relatively modest proposal, use of prediction markets for collaborative social science modeling; before considering the possibility of predictocracy. After cautioning that the case for self-government may argue against predictocracy, it notes that prediction markets could be used not only for democratic purposes but also for dictatorial ones. The chapter also explains how predictocracy could accommodate regional preferences and facilitate international cooperation.

Keywords:   predictocracy, prediction markets, decisions, international cooperation, social science modeling

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