There’s Still Time to Make Prediction Markets Useful
A long-awaited experiment in market-based forecasting is underway. But without clearer boundaries, it risks becoming little more than gambling.
Illustration: Boris Pramatarov for Bloomberg
People used to predict a great future for prediction markets. In 2008, 22 economists, including the Nobel laureates Kenneth Arrow, Paul Milgrom, Thomas Schelling, Robert Shiller and Vernon Smith, wrote a two-page manifesto in the journal Science calling them a “potent research tool” that must be freed from “unnecessary government restrictions.”
They cited “mounting evidence” that such markets could produce more accurate forecasts than conventional methods: