Steven Levitt On The Move To Legalize Prediction Markets
from the six-and-one-half-dozen dept
As we mentioned, a group of economists recently penned an open letter to lawmakers urging them to relax regulations that prevent prediction markets from opening up in the US. While the list of signees was pretty impressive, one name that was notably absent was Steven Levitt of Freakonomics fame, who is a fan of prediction markets. On his blog, he discussed his reasoning for not signing the letter. In addition to being hesitant to get involved in any such letters (which probably aren't that effective), he felt that this particular letter didn't go far enough, in that it sought to carve out exemptions for societally useful prediction markets, whereas Levitt sees no reason to separate prediction markets from other forms of gambling. This is an important point. Too often, people take a rather parochial view in their definitions of things like investments, markets and gambling when in fact they're all basically the same thing. So while it would be nice to see prediction markets allowed to flourish, this shouldn't necessarily be a separate goal than undoing the many absurd regulations pertaining to online gambling.Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
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huh?
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Markets ... Predictive of What?
Free markets are prone to boom-bust cycles. They're also prone to abuses like price-fixing, insider trading, deceptive advertising, and just plain fraud.
As a result, free markets need ongoing regulation in order to remain free.
If these prediction markets are following the same basic model, then they will be prone to all the same problems. You're going to need an SEC, Commerce Commission/Better Business Bureau/whatever (as appropriate for your jurisdiction) to try to rein in the worst of these. And yet you're still going to get the occasional October 1929 or Enron.
And what happens to the predictive value in all that?
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Terror prediction market
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Re: Terror prediction market
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Re: Re: Terror prediction market
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Not quite like gambling
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