A single-event prediction market might make it easier to determine more rigorously the probabilities of what really happened to Malaysia Airlines Flight 370. Presently, a wide variety of conjectures and conspiracy theories are swirling around (especially on CNN) about what might have happened to Flight 370, including such possibilities as sabotage, pilot error, a meteor strike, and (perhaps the most likely culprit) mechanical failure caused by an electrical fire. But without a prediction market, how can we know which of these theories or conjectures is most likely to be true?
By contrast, if prediction markets were legal in the US, thus allowing people to openly place monetary bets on their favorite missing-airplane theory (conspiracy or otherwise), Hayekian logic teaches us that, with a sufficient number of bets, we would be able to test which theory or conjecture is the one that is most likely to be true. So, what theory would you bet on, and how much money would you be willing to wager?
Addendum: since the US is most likely unwilling to legalize prediction markets anytime soon, perhaps another jurisdiction (like the People’s Republic of China or even Macau, a semi-autonomous city-state in China with a large casino industry) could step in to fill this legal void.
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