Says economist Robin Hanson, speaking about prediction markets (betting markets) in the last part (9/10) of his OSCON speech —a confused presentation, if it weren’t for this last part, which I found interesting.
#1. It’s not just betting, it’s speculating —buying, selling, and reversing your trades. You’ve got more freedom that just betting.
#2. Total anonymity plays a big role, as it was said in the Intel Corp paper. Event derivative traders are hidden behind their screen, sometimes thousands of miles away from the prediction exchange.
–> If you combine the anonymity factor with the speculating factor, then you get more honesty in the information aggregation process than with other forecasting mechanisms.
UPDATE: Robin Hanson comments…
I consider the terms “speculate” and “bet” to be nearly synonymous in this context.
I prefer using a standard vocabulary for all contexts.
I consider the terms “speculate” and “bet” to be nearly synonymous in this context.