This chapter focuses on the possibility that prediction markets might make forecasts that could provide almost all of the information needed for some set of decisions. In some cases, prediction markets might be able to replace institutions and individuals assigned to research and make particular decisions. In particular, the chapter shows how prediction markets might perform decision-making tasks typically assigned to regulatory bodies such as legislatures, administrative agencies, and judges. The chapter discusses the venerable jurisprudential debate about the wisdom of competing approaches. It explains how the legal system can achieve the flexibility of standards and the certainty of rules by generating predictions that have some effect under a particular legal standard. It explains how both insurance and prediction markets can serve as the foundation of a predictive decision-making regime.
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