If you think prediction markets are valuable it’s likely because you think they price things well—probably due to some kind of market efficiency… well why hasn’t that efficiency led to the creation of prediction markets...
Prediction markets generate information. Information is valuable as a public good. Failure of public good provision is not a failure of prediction markets.
I suspect the best structure long term will be something like: Use a dominant assurance contract (summary in this comment) to solve the public goods problem and generate a subsidy, then use that subsidy to sponsor a prediction market.
Prediction markets generate information. Information is valuable as a public good. Failure of public good provision is not a failure of prediction markets.
I think you’ve slightly missed my point. My claim is narrower than this. I’m saying that prediction markets have a concrete issue which means you should expect them to be less efficient at gathering data than alternatives. Even if information is a public good, it might not be worth as much as prediction markets would charge to find that information. Imagine if the cost of information via a prediction market was exponential in the cost of information gathering, that wouldn’t mean the right answer is to subsidise prediction markets more.
Prediction markets generate information. Information is valuable as a public good. Failure of public good provision is not a failure of prediction markets.
I suspect the best structure long term will be something like: Use a dominant assurance contract (summary in this comment) to solve the public goods problem and generate a subsidy, then use that subsidy to sponsor a prediction market.
I think you’ve slightly missed my point. My claim is narrower than this. I’m saying that prediction markets have a concrete issue which means you should expect them to be less efficient at gathering data than alternatives. Even if information is a public good, it might not be worth as much as prediction markets would charge to find that information. Imagine if the cost of information via a prediction market was exponential in the cost of information gathering, that wouldn’t mean the right answer is to subsidise prediction markets more.