The key, now, is to go beyond the accuracy issue and to move on to the utility issue.

It’s a much complex problematic, which those who have been over-selling the prediction markets are unwilling to undertake. [*]

Maybe a small bunch of prediction market people, maybe assembled in a new prediction market structure, might go for that lofty goal of fingering the specific instances where prediction markets create real social utility.

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[*] Yelling across the harbor, like an illuminated Jesus Christ, that prediction markets can help “avoiding future [financial] crisis” is a sign that some prediction market practitioners have lost their intellectual compass. To my knowledge, InTrade hadn’t had any prediction market focused on the “looming credit crunch crisis”, last summer. Its CEO should be careful about making any grand statement. As I wrote many times, at best, the prediction markets are the best umpire you can have between either the mass media and the politicians, on one hand, and a group consisting of the best experts, on the other hand. An umpire is only useful during critical times, in a game. But, other than that, most of the times, the umpire is not the determinant of the game —the players are.

The researchers and practitioners should make a solid case for each of these critical instances where the prediction markets have a real social utility.

Stop the over-selling. Let’s start the real work.

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