I don't know that this needs a "radically analytical" perspective at all.
Even liberal economists like Krugman and Stiglitz will tell you that the
perfect markets hypothesis is deeply flawed. These predictive markets may
make some people on wall street a lot of money because of all of the people
who believe the perfect market hypothesis. Even the example that the stock
markets "do a good job of valuing companies " seems trivial since there is
no other mechanism in place to do the valuing.
It seems to me that predictive markets really are based on the following
foolish hypothesis, if you let enough people gamble on some future event or
occurance, the most probable outcome will generate the most return. Forget
about the meaning of the term, "the most probable", even in this naieve
interpretation, I think it is clear that this is another idea for people
with too much money and not much else.
The book, When Genius Failed, by Roger Lowenstein is a great example of
what can happen when wall street attempts to capitalize on purely
speculative ideas. It is about Long Term Captial Management and how they
nearly caused the collapse of the international banking system. This is a
great read and especially since the lessons of this book appear to be
lessons that wall street is determined to ignore.
> [Original Message]
> From: Maurice Bazin <[log in to unmask]>
> To: <[log in to unmask]>
> Date: 4/15/2004 12:00:06 PM
> Subject: The future is here: Introduction to Predictive Markets
> Dear friends,
> I once thought that MIT's Technology Review would be interesting to
> browse through...
> So, today, I got the letter that follows and makes me feel very
> estranged from their present, not to mention how estranged I will
> become from their supposed future.
> What is all this about, from our "radically analytical" perspective"?