Overall, his input is very brainy.
It’-s a major contribution to the general discussion about prediction markets.
Please, allow me to disagree on one thing he said.
One proposed distinguishing criteria includes the size of an individual trader’-s stake, and the number of traders. The Iowa Electronic Markets are limited on both of these parameters. Such limits do succeed in preventing large hedging markets from masquerading as info-motivated event markets. But they do little to prevent generic gambling markets from masquerading as info-motivated event markets.
I have a fundamentally different view. What is important is not what Robin Hanson thinks of TradeSports-InTrade, BetFair-TradeFair, and HedgeStreet —-and what their motivation(s) are.
What is important is whether those prediction exchanges do generate trustworthy and accurate probabilistic predictions. Period.
They do or they do not. Period.
And guess which prediction exchange has been more than willing to host Robin Hanson’-s conditional prediction markets: Hint: it’-s not the Iowa Electronic Markets.
Did Robin Hanson tell that to the CFTC?
UPDATE: Robin Hanson’-s comment, posted below this post.
Chris, I did not take the CFTC call for comments as asking for what I would choose if I were king. I instead took it as them asking for help negotiating treacherous political waters. Part of the reality of their difficult situation is that the public, and hence Congress is quite wary that new rules might in effect legalize general gambling. Convincing the public that betting markets provide accurate predictions is not enough to convince them to legalize such markets in general. If there is any doubt, if I were king I would in fact legalize general gambling.