Debate is raging between Robin Hanson and the futarchy critics

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Robin Hanson comments on Paul Hewitt&#8217-s blog.

Paul Hewitt comments on Eric Crampton&#8217-s blog.

Paul Hewitt comments on Robin Hanson&#8217-s blog. Many exchanges with Robin Hanson. Read it all.

Paul Hewitt:

[…] My point is that the case for prediction markets has not been made, at all. There is a tiny bit of proof that they are as good as alternative methods, and in a very few cases, very slightly better. Also, you need to be aware that even the slightly better prediction markets had the benefit of the alternative forecasting institution available to it. That is, the official forecasters at HP were also participants in the ever-so-slightly better prediction markets. […]

&#8211-&gt- I personally stay away from any discussion about conditional prediction markets (and futarchy). I prefer focusing on the &#8217-simple&#8217- prediction markets.

2009 New Jersey Gubernatorial Race: Was Nate Silvers prediction more accurate than InTrades?

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Nate Silver&#8217-s prediction (November 2, 2009): &#8220-I&#8217-d make Christie about the 4:3 favorite.&#8221-

[ UPDATE: Nate Silver’s prediction post-mortem on the 2009 US elections.]

You can see that days before Elections 2009, InTrade was too heavy on Corzine:




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Nobel Prize for Economics 2009 – Prediction Accuracy

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The Royal Swedish Academy of Sciences has decided to award The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2009 to Elinor Ostrom &#8220-for her analysis of economic governance, especially the commons&#8221- and Oliver E. Williamson &#8220-for his analysis of economic governance, especially the boundaries of the firm&#8221-.

Both the bookmakers and the prection markets are utterly useless in trying to divine who will get the Nobel prize of economics.

Below is the 2009 prediction post-mortem:

1. Bookmakers

Ladbrokes&#8217-s probabilities (odds) for the 2009 Nobel prize in economics:

Eugene Fama 2/1
Paul Romer 4/1
Ernst Fehr 6/1
Kenneth R. French 6/1
William Nordhaus 6/1
Robert Barro 7/1
Matthew J Rabin 8/1
Jean Tirole 9/1
Martin Weitzman 9/1
Chris Pissarides 10/1
Dale T Mortensen 10/1
Xavier Sala-i-Martin 10/1
Avinash Dixit 14/1
Jagdish N. Bhagwati 14/1
Robert Schiller [sic] 14/1
William Baumol 16/1
Martin S. Feldstein 20/1
Christopher Sims 25/1
Lars P. Hansen 25/1
Nancy Stokey 25/1
Peter A Diamond 25/1
Thomas J. Sargent 25/1
Dale Jorgenson 33/1
Paul Milgrom 33/1
Oliver Hart 40/1
Bengt R Holmstrom 50/1
Elhanan Helpman 50/1
Ellinor Ostrom 50/1
Gene M Grossman 50/1
Karl-Goran Maler 50/1
Oliver Williamson 50/1
Robert B Wilson 50/1

2. Betting Pools

Here is the betting in the Nobel pool at Harvard:

Robert Barro -10%
John Taylor &#8211- 8%
Paul Milgrom &#8211- 8%
Jean Tirole &#8211- 6%
Oliver Williamson &#8211- 6%
Martin Weitzman &#8211- 6%
Eugene Fama &#8211- 5%
Richard Thaler &#8211- 5%
Lars Hansen &#8211- 4%
Paul Romer &#8211- 4%

3. Prediction Markets



Previously: Nobel Prize for Economics 2009 Predictions

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The most bombastic prediction markets blogger say that the market has failed if its price close to closing is far away from the final price.

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My dear honorable Eric Crampton,

Here&#8217-s what I published about the &#8220-Olympics in Chicago&#8221- prediction markets:

The market participants did not possess a sufficient level of information completeness to arrive at the correct prediction.

Stay away from these markets where the intention is to divine the decision of a close, opaque group. It is impossible. No good information leaks out.

So, I did not say why you wrote. (I could sue your pants off for defamation. :-D ) I understand that prediction markets have to fail sometimes to be right. But the prediction markets on the Olympics in Chicago are just like playing the lottery. Nobody knows anything. No good information aggregation is possible since no good information is leaking out.

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Why did all the prediction markets get the Olympic decision to reject Chicago so wrong?

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The blogger at Sabernomics sees &#8220-this as a win for prediction markets, not a failure.&#8221-

I don&#8217-t share his views, but I wanted to link to his piece for you to make up your own mind about the issue.

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