Robin Hanson, is what I would term a market fundamentalist – somebody who believes that markets are the primary mechanism for achieving the public good. Recent events have demonstrated that this creed is morally bankrupt. We are, in the words of Michael Sandel, “at the end of an era of market triumphalism”.

Robin Hanson:

I deny the accusation, though I’m not sure why I should have to. Having a high opinion of the eventual info power of decision markets [*] is very different from saying “markets are the primary mechanism for achieving the public good.” Shouldn’t you have to first provide support for your accusation, rather than me somehow having to first prove bald accusations wrong?

[*] That’s at the core of the issue. Somebody who has a “high opinion” of something that has not given stellar results since 1988 is obviously exaggerating. I personally have a somewhat good opinion of prediction markets and conditional prediction markets, but not a “high opinion” —sense my nuance. Niall O’Connor has been too strong in his “accusation” ( ), but he is a bit in the right. [UPDATE: Niall O'Connor has an honest reply to Robin Hanson.]

Via Mike Linksvayer in a comment…

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Previously: About Justin Wolfers’s column

Justin Wolfers’ Freakonomics post (which suggests that BetFair would have a better predictive power if US traders could use it).

Well, obviously, the observers expect better accuracy from the prediction markets than from the polls or the pundits. And thus, their disappointment is big. James Surowiecki said, in the December 2006 Yahoo! conference, that that’s because the prediction markets are new.

So the lesson is that… the industry should not send out there spokespeople who over-sell the predictive power of the prediction markets. They are sightly better than the polls, but they are not magical. And they feed on polls, anyway. The prediction market mantra should be based strictly on science.