1/ One of the most interesting applications of prediction markets is Futarchy: Government run by prediction markets.
A primer, much of this cribbed from @robinhanson and others:
A primer, much of this cribbed from @robinhanson and others:
2/ Example of Futarchy in action:
"If we fund this project, what will our GDP be in 5 years?"
vs. “If we do not fund this project, what will our GDP be in 5 years?
Assuming GDP optimization is the goal, +the crowd believes GDP will be higher w/ funding, then fund the project.
"If we fund this project, what will our GDP be in 5 years?"
vs. “If we do not fund this project, what will our GDP be in 5 years?
Assuming GDP optimization is the goal, +the crowd believes GDP will be higher w/ funding, then fund the project.
3/ Governments can do the following:
1) allow citizens to democratically vote on which metrics to optimize for and
2) create markets to let the wisdom of the crowd inform how to reach those goals
Democracy tell us what we want, while speculators bet on how to get it.
1) allow citizens to democratically vote on which metrics to optimize for and
2) create markets to let the wisdom of the crowd inform how to reach those goals
Democracy tell us what we want, while speculators bet on how to get it.
4/ Gov’t could ask its citizens to rank order their priorities
e.g
a) GDP
b) education
c) healthcare.
Gov’t optimizes against those priorities. Then, Futarchy optimizes on that vector.
e.g
a) GDP
b) education
c) healthcare.
Gov’t optimizes against those priorities. Then, Futarchy optimizes on that vector.
5/ When democracy was invented, the world was very different.
a) interests were more regional than they are today.
b) the cost of communicating was much higher.
These factors made sending regional representatives to a central legislature an obvious democratic strategy.
a) interests were more regional than they are today.
b) the cost of communicating was much higher.
These factors made sending regional representatives to a central legislature an obvious democratic strategy.
6/ Right now, politicians don't win by telling the truth or saying reasonable things.
Under futarchy, there would at least be some market for truth-telling politicians.
Under futarchy, there would at least be some market for truth-telling politicians.
7/ Not only does futarchy help us make better decisions, it helps us make quicker, more scalable solutions, by automating the process & reducing overhead. Right now, gov’t is bloated + main business model is entrenching itself.
8/ “Futarchy seems promising if we accept the following 3 assumptions:
1. Democracies fail largely by not aggregating available info.
2. It is not hard to tell rich happy nations from poor miserable ones.
3. Betting markets are our best known institution for aggregating info.”
1. Democracies fail largely by not aggregating available info.
2. It is not hard to tell rich happy nations from poor miserable ones.
3. Betting markets are our best known institution for aggregating info.”
9/ Primary barriers to Futarchy adoption are lack of real world case studies, lack of general purpose Futarchy solutions, and entrenched institutions that are resistant to new models.
10/ While Futarchy may provide a good theory to make decisions, at this time, it doesn't sufficiently addresss complex and important values like fairness and integrity and justice.
11/ Futarchy solves for informational inefficiencies while retaining democracy’s egalitarian properties, all while automating the process, hopefully making capitalism and democracy more compatible with each other.
Further reading: hanson.gmu.edu/futarchy.html
blog.ethereum.org/2014/08/21/int…
Further reading: hanson.gmu.edu/futarchy.html
blog.ethereum.org/2014/08/21/int…
