CFM hated it when Peter McCluskey wrote:
What many of us want from prediction markets bears more resemblance to the products of think-tanks than it does to any other institution that I’-m aware of
But this reminds me of something. When has a pro-market think tank ever subjected its policy recommendations to market evaluation? Never, as far as I know.
The Independent Institute published a book chapter on Decision Markets by Robin Hanson in Entrepreneurial Economics. When institute Research Director Alexander Tabarrok gave a talk on the book, you can guess what subject he spent the most time on.
Think tanks that talk about prediction markets (AEI-Brookings is another) should walk the walk, as should institutions that laud the rigors of the market generally. This could involve setting up and running a non-profit exchange or paying Intrade to offer certain contracts, or variations between.
Many think tank proposals have virtually no chance of implementation. These would not be ideal candidates for prediction market evaluation, but not all think tank prescriptions are politically impossible, and much of what think tanks do is critique proposals that do stand real chance of implementation. If the choice is between yet another Op-Ed and a contract on the subject, I’-ll take the latter.
I’-ll make a $500 donation to the first think thank that makes an interesting, non-bogus use of real-money prediction markets before the end of 2007. I’-ll be the judge of bogosity and interestingness, but I can say that a paper about prediction markets counts as uninteresting.
A grouping that loves to talk about markets (that is when they’-re not going off on incoherent rants) but hates any sort of evaluation consists of U.S. Libertarian Party candidates, activists, and donorsfools. Each election there are LP candidates who vigorously argue that they have a good shot at winning significant office or at least obtaining millions of votes in the case of the U.S. Presidency, ignoring 35 years of abject failure.
The case of Michael Badnarik’-s “-campaign”- for U.S. Congress ending last month is a hilarious case in point. He raised over $400,000, claimed he could win, and got …- 4 percent of the vote. He’-s now begging for another $200k and it turns out his “-campaign”- “-manager”- is starting his own Scientology-like religion.
That’-s not all that out there for an LP campaign, nor is it surprising–-there is no competition from non-wackos for candidacies that are doomed to failure.
One LP campaign this cycle that didn’-t appear to be crazy but nevertheless radically overestimated its chances of success was that of Bob Smither, running in Tom DeLay’-s GOP district against a Nick Lampson, a Democrat ex-Congressperson (who won easily) and a write-in Republican. Because the TX-22 race this year was unusual it was one of several seats Intrade ran markets on. The Intrade market included DEM, GOP, and FIELD contracts. FIELD could be taken as representing Smither, so this may have been the very first LP candidacy evaluated by traders. (FIELD exists in most Intrade election outcome markets but typically attacts no trading, as the field hasn’-t a snowball’-s chance in hell.) Their evaluation was not kind, as I pointed out in a blog post and several times in comments on a blog (no longer live) that hyped Smither’-s chances, where I goaded fans to place bets. Smither polled 6%, against 51% for the Democrat and 43% for the write-in Republican.
One doesn’-t need a prediction market to see that LPers are delusional, amnesiac, or just plain stupid. But as someone with strong libertarian sympathies (actually like prediction market legal scholar Tom W. Bell I’-d prefer to take back the word liberal) I’-ll gladly take additional opportunities to rub the facts in the face of my embarrassing and hypocritically scared-of-markets fellow travellers in the LP.
Did I say baiting? Oops, I meant betting!