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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.100) Chapter 4 Committees

Michael Abramowicz

Yale University Press

This chapter suggests that prediction markets, if carefully designed, can serve as an alternative to committees. Once created, prediction markets might allow for more streamlined decision-making than committees might, avoiding the necessity of meetings and direct deliberation. At the same time, the profit incentive that prediction markets provide can help overcome some of the pathologies of group decision-making. Just as important, it is possible to design a “deliberative prediction market” that gives individual traders incentives to share information with one another. The chapter reveals that other approaches to encouraging information revelation and reflection already exist, but the decentralized nature of prediction markets might provide for cheaper and even more effective decision-making. It argues that because a prediction market can be designed to forecast an expert assessment, prediction markets can be used to make decisions on virtually any topic that committees might address.

Keywords:   committees, prediction markets, decision-making, group decision, information, forecast

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