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Statement on Prediction Markets
Statement on Prediction Markets (2007)
  • Vernon L. Smith
  • Kenneth J. Arrow, Stanford University
  • Shyam Sunder, Yale University
  • Robert Forsythe, University of South Florida
  • Robert E. Litan
  • Eric Zitzewitz, Dartmouth College
  • Michael Gorham, Illinois Institute of Technology
  • Robert W. Hahn, University of Oxford
  • Robin Hanson, George Mason University
  • Daniel Kahneman, Princeton University
  • John O. Ledyard, California Institute of Technology
  • Saul Levmore
  • Paul R. Milgrom, Stanford University
  • Forrest D. Nelson, University of Iowa
  • George R. Neumann, University of Iowa
  • Marco Ottaviani, Northwestern University
  • Charles R. Plott, California Institute of Technology
  • Thomas C. Schelling, University of Maryland - Baltimore
  • Robert J. Shiller, Yale University
  • Erik C. Snowberg, Stanford University
  • Cass R. Sunstein, Harvard Law School
  • Paul C. Tetlock, Columbia Business School
  • Philip E. Tetlock, University of California, Berkeley
  • Hal R. Varian, University of California - Berkeley
  • Justin Wolfers
Abstract

Prediction markets are markets for contracts that yield payments based on the outcome of an uncertain future event, such as a presidential election. Using these markets as forecasting tools could substantially improve decision making in the private and public sectors.

We argue that U.S. regulators should lower barriers to the creation and design of prediction markets by creating a safe harbor for certain types of small stakes markets. We believe our proposed change has the potential to stimulate innovation in the design and use of prediction markets throughout the economy, and in the process to provide information that will benefit the private sector and government alike.

Keywords
  • prediction markets,
  • public policy,
  • forecasting,
  • regulation
Disciplines
Publication Date
May, 2007
Citation Information
Vernon L. Smith, Kenneth J. Arrow, Shyam Sunder, Robert Forsythe, et al.. "Statement on Prediction Markets" Statement on Prediction Markets (2007)
Available at: http://works.bepress.com/vernon_smith/1/