This chapter elaborates on the argument that prediction markets can help aggregate information, noting that at times, what prediction markets aggregate might more accurately be understood as individual assessments of information. The prediction markets' aggregative powers will be greater if markets are subsidized, and this chapter explains how the market mechanisms described might be subsidized. It provides a partial description of the Policy Analysis Market, which was to have been a governmentally subsidized set of prediction markets. The collapse of that program should warn those who are optimistic about the short-term possibilities of prediction markets. The chapter also describes current regulatory obstacles and ways they might be avoided. It discusses an existing application of prediction markets, the Foresight Exchange, which avoids those obstacles by using play money and then imagines two potential government applications of prediction markets.
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