prior probability really enjoys Robin Hanson’s blog Overcoming Bias and admire his cutting-edge academic work, especially his project on prediction markets. Recently, Hanson proposed a number of reasons why people might reasonably refuse to place bets to back up their beliefs. Although betting might not be justified in some social situations, why is private betting illegal carte blanche in most places? After all, people are allowed to bet on stocks and other securities, and all decisions are fraught with some level of risk and uncertainty, so why shouldn’t people be free to openly place bets on whatever events or contingencies they want to bet on?
The legal position in the US, or what prior probability likes to call “legal failure” as opposed to “market failure,” does not allow one to run a real prediction market with real money, but now that intrade has shut down, our dream is to one day start up a collaborative and user-friendly prediction market in which people could legally place bets on various propositions, such as the outcome of a legal case, the outcome of an election, or the outcome of a proposed piece of legislation (i.e. the likelihood that a proposed bill will be approved by both houses of Congress).
So what’s stopping us, other than the legal system?