There was an article in the New York Times about this world events betting market called ideosphere. they dont use real money so there may be a problem with people being able to lodge cheap predictions that they dont have to stand behind. its an interesting step in this direction. In terms of unearthing potential risks could such a mechanism be used? I suppose share prices, bond prices perform this function for most tradeable risk but i wonder are there other types of risk that such a mechanism would better reveal.
http://www.ideosphere.com/
3 comments:
the freakonomics blog had some interesting posts on predictions for, among other things, the weather and the end of the world
http://www.freakonomics.com/blog/?s=betting
The weather and the end of the world. Now there's a couple of things that may have slightly different predictions!
The US government tried to exploit this idea a while ago.Admiral Poindexter (a PhD in economics) & National Security Advisor I think, had bookies taking bets on various things like would the King of Jordan be assassinated.The logic being that markets being efficient the odds would end being a good prediction, the wisdom of crowds in effect.It was canceled because it looked rather unseemly. A good example of how smart economics isn't always so smart.
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