Crazy, quixotic, or feasible? (Part 2 of 3)

Instead of trying to censor conspiracy theories, why not allow people to bet on them? Below is the next part of my Conspiracy Theory Betting Market proposal from my forthcoming paper “Betting on Conspiracies” (emphasis added, footnotes below the fold):

“My proposed Conspiracy Theory Betting Market is a retrodiction market: people would be able to buy or sell ‘conspiracy theory contracts,’ and each one of these conspiracy theory contracts would be structured as simple questions with discrete ‘Yes’ or ‘No’ outcomes. People would buy such ‘Yes’ or ‘No’ conspiracy theory contracts depending on whether they believed the answer to the specific question being bet on will turn out to be ‘Yes’ or ‘No,’ and each contract settles to some sum, say $1, if one’s answer turns out to be right, or $0 otherwise. Anyone who disagrees with the current consensus about a particular conspiracy theory would have a profit motive to participate in the market.

“For example, if you think Lee Harvey Oswald was part of a conspiracy or that 9/11 was an ‘inside job,’ you would be able to buy ‘Yes’ contracts on these topics, and conversely, if you think Oswald acted alone (i.e. was not part of a conspiracy to kill President John F. Kennedy) or that 9/11 was not an inside job, you would be able to buy ‘No’ contracts. The prices of these bets would be based on supply on demand, depending on how many people buy ‘Yes’ or ‘No’ contracts. If more people believe Oswald was part of a conspiracy, the price of the ‘Yes’ contract will rise, and if more people believe Oswald acted alone, the price of the ‘No’ contract will rise. The more participants or bets there are, the more likely that prices will reflect the true probabilities of the various conspiracy theories being bet on.[1]

“Imagine that a research university were to subsidize my proposed retrodiction market.[2] Further imagine that a select group of academics, pundits, and other “experts” could be allocated tokens in order to encourage them to participate in this betting market, and that statistics were collected (say, via a scoreboard) on how well they played.[3] However this proposed market is designed, it is possible to imagine a retrodiction market on most disputed conspiracy theories, with the ‘going odds’ or prices of bets based on the current academic or popular consensus. Either way, people–laymen and experts alike–would have to either ‘put up or shut up’ by supporting their claims with real money.[4] Admittedly, the details and design of my proposed Conspiracy Theory Betting Market are still open for discussion [see Part 3 of my series tomorrow], but the novelty of a retrodiction market–a betting market on past events–should not count against it, for historically speaking, markets often evolve by trial and error.”

Screen Shot 2021-07-16 at 12.13.00 PM

[1] See Wolfers & Zitzewitz (2006).

[2] I am in the process of requesting internal funding from my home institution, the University of Central Florida, to create a beta-version of such a market.

[3] See, e.g., Tetlock & Gardner (2016).

[4] Following Hanson (2008), one could further imagine that, instead of funding their research exclusively through cumbersome and slow NSF or Ford Foundation grants, academics could fund their research with winning from their previous bets.

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s