rhanson@gmu.edu (Robin Hanson) writes:
>Similarly, if a market said a given treaty made war more likely the treaty
>could not be approved on the justification that it would keep us out of war,
>thought it might be approved on other justifications.
The natural response of those who negotiated the treaty would be that they
have nonpublic information which is better than the market's information.
I said on another list (on the subject of corporate board decisions):
>Many board members could answer this by claiming to have had too
>little capital to fix it. Or, at least in the forseeable future, claim
>to believe that such insider trading is unfair. This attitude seems
>sufficiently widespread that I don't see how it can be fully eliminated.
To which you responded:
In this case, we might expect them to publicly declare their
best estimate, and to bet a lot for it. If speculators don't
believe them and move the price to their estimate, I think it
reasonable to say the decision should go with the market estimate,
not with what the board says is its estimate.
In the case of treaties, I suspect that negotiators will find some hard-to
-analyze argument for secrecy (based on ethical problems with insider trading
and/or on the desire to prevent other nations from knowing how badly our
government wants the treaty).
A more achievable goal for using idea futures would be to have an open
market for estimating which political party or presidential candidate would
best minimize the risk of war, and then have private markets for those with
inside information to estimate the effects of individual decisions such as
treaties.
>3) Choose some official national objective function, something like GDP,
>only more carefully measured and trying to include more contributions like
>the value of leisure, etc. Have some independent and well monitored agency
>continually update this estimate of the state of the nation. Then have the
>rule be that decision D must be enacted whenever a market says that among
>all the decisions markets are considering (including letting policy makers
>do what they want), D gives the highest conditional estimate for this
>national objective. I think this is the most promising approach.
Given the problems experts have agreeing on how to quantify relatively
well understood things like inflation, I wouldn't expect much agreement
about how to quantify something for which you don't even have a name.
I'd expect that measuring the value of unowned things like Linux or
whales would be more subject to political manipulation.
I don't think a single official measure is wise. I'd prefer to use a
handfull of different measures (an economic growth indicator, an inequality
indicator, a leisure indicator, etc.).
-- ------------------------------------------------------------------------ Peter McCluskey | Boycott Amazon.com until they stop suing http://www.rahul.net/pcm | companies that support 1-click shopping.
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