As promised, here is an excerpt from the latest draft of my paper “Betting on Conspiracies“, forthcoming in The Journal of Law & Public Policy, in which I propose a betting market in conspiracy theories (footnotes omitted):
“Do conspiracy theories threaten democracy and constitutional values, or do they help to strengthen such values by putting them to the test? Also, how should we decide which conspiracy theories to keep an open mind about and which to dismiss out of hand? I propose a Conspiracy Theory Betting Market or ‘retrodiction market’ to resolve these questions. In other words, instead of trying to suppress conspiracy theories, why not allow people to make trades or place bets about the probable truth-values of such conspiracies?
“Why a retrodiction market for conspiracy theories? Why frame conspiracy theories as wagers or bets? *** Among other things, a betting market in conspiracy theories would aggregate disparate sources of information, would provide financial and reputational incentives to place winning bets, and would scale well with the number of people and opinions. Such a betting market would also generate unambiguous outputs that are easy to measure. In the case of my proposed betting market in conspiracy theories, success could be measured in terms of the number of participants in the market, and the volume of trades.
“Another important property of my proposed conspiracy theory betting market is that the truth-value of any given conspiracy claim would be aggregated and reflected in the price of a particular bet. Indeed, this information aggregation function is a fundamental feature of markets generally: a group’s collective model is generally more accurate than any individual model, or in the words of one proponent of prediction markets: ‘when dealing with complex issues involving many variables or moving parts, no one can claim to have a complete model or theory from which to make fail-safe predictions. More likely everyone has a partial understanding of the situation, further clouded by his own biases. But when all these partial, biased models are put together … knowledge accumulates, gaps get filled, while the various biases cancel each other.’ Similarly, my proposed retrodiction market would allow people, regardless of their aesthetic preferences (political, moral, religious, etc.) to trade on their beliefs about past events.”
More excerpts coming soon!