Why is it suggested that majorities are especially potent?

It has similarly been suggested that majorities are especially potent because people do not want to incur the wrath, or lose the favor, of large numbers of others, and that when minorities have influence, it is because they produce genuine attitudinal change.

Why do many groups do well to enlist prediction markets in arriving at their judgments?

To the extent feasible, many groups would often do well to enlist prediction markets in arriving at their judgments, above all because of the accuracy of the price signal.

What is the explanation for the failure of the prediction market?

Investors might believe, for example, that the predictions of the Iowa Electronic Markets will affect the outcomes of political campaigns, by making certain candidates look promising or instead doomed.

What is the probability of a group dividing into n independent items?

The existence of these n independent items of evidence should then lead the group as a whole—and each group member post-deliberation—to assign a still higher posterior probability to the hypothesis, i.e., a probability well above 0.7.

What is the second reason that group members might silence themselves?

Their silence might stem not from a belief that they are wrong, as in the case of informational pressure, but instead from the risk of social sanctions of various sorts.

Open AccessJournal Article10.3366/EPI.2006.3.3.192

Deliberating Groups versus Prediction Markets (or Hayek's Challenge to Habermas)

Cass R. Sunstein

- 01 Oct 2006

- Episteme

- Vol. 3, Iss: 3, pp 192-213

127

TL;DR: The success of prediction markets offers a set of lessons for increasing the likelihood that groups can obtain the information that their members have as discussed by the authors, which can be used to increase the likelihood of revealing privately held knowledge.

Abstract: For multiple reasons, deliberating groups often converge on falsehood rather than truth. Individual errors may be amplified rather than cured. Group members may fall victim to a bad cascade, either informational or reputational. Deliberators may emphasize shared information at the expense of uniquely held information. Finally, group polarization may lead even rational people to unjustified extremism. By contrast, prediction markets often produce accurate results, because they create strong incentives for revelation of privately held knowledge and succeed in aggregating widely dispersed information. The success of prediction markets offers a set of lessons for increasing the likelihood that groups can obtain the information that their members have.

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Most frequently asked questions

1. How many cases did the majority of the group give the right answer?

If a majority of individuals in the group gave the right answer, the group’s decision moved toward the majority in 79 percent of the cases.

2. Why do prediction markets outperform deliberating groups?

prediction markets realign private incentives in a way that makes them exceptionally well-designed to reduce the problems that infect deliberating groups.

3. What are some other companies using prediction markets?

Many other companies, including Ely Lilly and Microsoft, have used prediction markets as well to supplement deliberation about future courses of action.

4. What are the main advantages of deliberative bodies?

Deliberation is generally thought to be the best way of carrying out that task, but deliberative bodies are subject to serious problems.

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References

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- Social Science Research Network

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TL;DR: For example, this article argued that the use of race in police searches is neither plainly unconstitutional nor simply efficient, and the key question is not whether racial profiling maximizes the success rate of searches, but whether it produces a ratchet effect by race associated with those searches.

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Deliberating Groups versus Prediction Markets (or Hayek's Challenge to Habermas)

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Most frequently asked questions

1. How many cases did the majority of the group give the right answer?

2. Why do prediction markets outperform deliberating groups?

3. What are some other companies using prediction markets?

4. What are the main advantages of deliberative bodies?

5. Why is it suggested that majorities are especially potent?

6. Why do many groups do well to enlist prediction markets in arriving at their judgments?

7. What is the explanation for the failure of the prediction market?

8. What is the probability of a group dividing into n independent items?

9. What is the second reason that group members might silence themselves?

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Citations

Incompletely Theorized Agreements in Constitutional Law

Climate Change and International Human Rights Litigation: A Critical Appraisal

If People Would Be Outraged by Their Rulings, Should Judges Care?

Professionals or Politicians: The Uncertain Empirical Case for an Elected Rather Than Appointed Judiciary

ConsensUs: Supporting Multi-Criteria Group Decisions by Visualizing Points of Disagreement

References

Without Peers? The Blind Spot in the Debate over How to Allocate Educational Control between Parent and State

Deliberating Groups Versus Prediction Markets (Or Hayek's Challenge to Habermas)

Monogamy's Law: Compulsory Monogamy and Polyamorous Existence

Is Capital Punishment Morally Required? The Relevance of Life-Life Tradeoffs

Rethinking Racial Profiling: A Critique of the Economics, Civil Liberties, and Constitutional Literature, and of Criminal Profiling More Generally

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