Prediction Markets: The Statocrats’ Fears

Source: EconLog
by Pierre Lemieux

“The standard argument for prediction markets is that, similarly to standard financial markets do, they generate prices that incorporate the knowledge of insiders and anybody who chooses to participate. Political prediction markets also motivate participating citizens to acquire relevant information — although it is presumably more about what the other voters will do with their own (meager) information than about substantive issues. Some academic research suggests that the electoral forecasts of prediction markets have been more accurate than opinion polls. … The reasons given last Summer by a group of Democratic senators, including Dianne Feinstein and Elizabeth Warren, to oppose political prediction markets betray their strange democratic mystique.” (11/15/23)