This chapter explores ways in which public corporations might harness the benefits of prediction markets. A major challenge addressed by corporate law scholarship is that agency costs sometimes might lead managers to make decisions that advance their own interests rather than those of the shareholders. A prediction market can be seen as a mechanism that can help counter those agency costs, and it may be more effective than some alternative mechanisms, such as shareholder voting. This chapter explores a range of potential applications of prediction markets. It argues that a more powerful Hollywood Stock Exchange might not merely predict movie success but might also be used to determine which movies would be made. The chapter explains that prediction markets might promote the flow of information, both to managers and to actual and potential shareholders, and can serve as a weak form of insider trading.
Yale Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.
If you think you should have access to this title, please contact your librarian.
To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us.