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Unleashing Prediction Markets

Unleashing Prediction Markets

Chapter:
(p.60) Chapter Four Unleashing Prediction Markets
Source:
Accelerating Democracy
Author(s):
John O. McGinnis
Publisher:
Princeton University Press
DOI:10.23943/princeton/9780691151021.003.0005

This chapter focuses on political prediction markets, that is markets that allow the public to speculate on election and policy outcomes. Prediction markets temper three of the largest problems of politics. First, they offer a mechanism for overcoming what has been called the “basic public action problem” of collective decision making—the Difficulty of persuading individual citizens to provide information that is useful to the whole community. Second, the markets help mix expert and dispersed o,pinion. Finally, prediction markets are able to draw together information into a single place and numerical form, economizing on the attention of citizens. This latter capacity is particularly important today, because in an age of accelerating technology, people are likely to be distracted from the business of public life by the more compelling entertainment of private life.

Keywords:   political prediction markets, information technology, elections, public action problem, collective decision making

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