Regarding Robin's paper, http://hanson.gmu.edu/deceive.pdf...
"A similar argument applies to a group of agents. If the group is to
avoid combinations of bets that are guarantee losses, then each group
member must offer the same betting odds on every proposition."
Since groups don't do this, there must be bets we outsiders can make
with group members that are guaranteed profitable. But they are not
obvious.
For example, some people think Amazon.com will fail, others think it
will thrive. These people have different ideas about the fair value of
the company's stock today. Theoretically I could buy stock cheaply from
the first group and sell it expensively to the second. But in practice
I can't, because those groups can get a better deal in the stock market.
Of course for most issues there is no existing market, but in principle
you could create an Idea Futures market for virtually any issue on which
people disagree.
What does the existence of markets and market prices say about the
existence of disagreement? Why don't people pour all of their resources
into markets where they disagree that the current market-clearing price
is correct? Presumably people find most market prices to be "incorrect"
to some degree, almost all the time.
Can this be explained because people aren't as confident in their beliefs
as they like to think that they are? They're "sure" that the stock is
underpriced or overpriced, but when it comes time to put their money down,
suddenly they are not so sure.
If so, then perhaps the existence of an IF market would make people more
aware of their true (lack of) certainty about their beliefs.
Hal
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