http://www.hss.caltech.edu/~hanson/dc95talk.html
As currently conceived, new digital media may not help much. Sure anyone can publish on the web, but editors remain crucial to managing the flood. More help will come when web links can followed backwards, making criticism easy to find. But maybe we can do much better.
Imagine having betting markets on most disputed questions, with the going odds treated socially as the current consensus. Imagine that pundits are expected to "put up or shut up" and accompany claims with at least token bets, and that statistics are collected on how well people do. Imagine that public interest groups subsidize pools on questions of interest to them, and that anyone could play, to take a stand on an important issue, to insure against risk, or just for fun. Imagine "Idea Futures".
This cartioon reflects wide-spread skepticism about media & "pundit" incentives. If experts never lose, why should they try hard to be accurate?
A CLASSIC CASE OF OVERREACTION
However, many complain the media consensus we see is biased, either by the ideologies of reporters, the interests of owners, sponsors, or sources, or by what makes a dramatic story. Sure reporters would like to be right, all else equal. But so much else is going on that it is easy to be skeptical.
Can we do better?
We cannot expect China ... to settle down into some kind of stable political economic order in 10 years. We're looking at a really long period of potential instabilities. Potentially serious instabilities.
Sometime within the next couple of decades, I'm expecting to turn on CNN ... and see ... a heap of smashed and burning cellphones, satellite dishes, and television sets piled up in a public square in Shenzhen, and ... a vigorous new leader in Beijing.
"Al Gore's book is full of calculated disinformation. For instance, he claims that 98 percent of scientists believe global warming is taking place. However a Gallup poll of scientists involved in global climate research shows that 53 percent do not believe that global warming has occurred, 30 percent say they don't know, and only 17 percent are devotees of this dubious theory."
Even though polling is if doubtful relevance for determining the scientific truth of any proposition, it should be pointed out that nowhere in the actual poll results are there figures that resemble those cited by ... Limbaugh. ...
Notice: While the question of whether this move is good for AT&T profits is complex and potentially contentious, here the media report a clear consensus. Why? Because here a market exists and offers this consensus, and because business reporters are willing to defer to a market consensus -- it seems less open to manipulation by interested parties.AT&T Will Split Into 3 Companies
Why ...? Because companies that try to do too many things at once get in their own way, AT&T Chairman Robert E. Allen suggested Wednesday. ... Telecommuncations analysts and consultants agreed, and so did investors, as they boosted AT&T stock 10.6%.
Maybe we should consider trying to make other news more like business news.
Oh ye Schooles. ... Let us take out of the hospitals, out of the Camps, or from elsewhere, 200, or 500 poor People, that have Fevers, Pleurisies, etc. Let us divide them into halfes, let us cast lots, that one halfe of them may fall to my share, and the other to yours; ... we shall see how many Funerals both of us shall have: But let the reward of the contention or wager, be 300 Florens, deposited on both sides: Here your business is decided.
There are many technical issues regarding how to allow ubiquitous betting markets, but for now I'll just try to make clear what they could mean. (Feel free to raise such issues in the question period.)
With idea futures, Wegener could have opened a market for people to bet on his theory, perhaps to be judged by some official body of geologists in a century. He could have then offered to bet a token amount at, say, 1-4 odds, in effect saying there was at least at 20% chance his claim would be vindicated. His opponents would have had to either accept this estimate, and its implications about the importance of Wegener's research, or bet enough to drive the market odds down to something a little closer to "impossible". They could not suppress Wegener merely by silence or ridicule.
As Wegener increased his stake, buying more bets to move the price back up, his opponents would hopefully think just a little more carefully before betting even more to move the price back down. Others might find it in their interest to support Wegener; anyone who thought the consensus odds were wrong would expect to make money by betting, and would thereby move the consensus toward what they believe. Everyone would have a clear incentive to be careful and honest!
The market would encourage more research related to continental drift, as one could make money by being the first to trade on new relevant information. Eventually the evidence would more clearly tip in Wegener's favor, and the price of his bets would rise. Wegener, or his children, could then sell those bets and reap some rewards. While those rewards would not make up for years of neglect, at least he would get something.
As the controversy became settled, and opinions converged, people would gradually sell and leave the market. Few people, if any, need be left for the final judging, which could usually be avoided (using mechanisms to be described below).
In the journal Science, Robert Pool speculated that a market in cold fusion might have gone something like Figure 1 [Poo]. If there really had been a betting market, then there would have been a market price that journalists like Pool could publish as news. A table of going prices might appear on the science page in the newspaper, much like the stock page in the business section, conveying current scientific opinion better than the current "balanced" interviews with extremists on all sides. It's been suggested [Ze] that the added information in betting market prices might have helped resolve the debate more quickly
Figure 1 A Hypothetical Market in Cold Fusion
There needn't be a conflict between going through slow proper channels and
getting the word out, if a fast market were a proper channel. The effect
of staged media events might be reduced as it might not be news if the
price didn't change; advocates would have to convince, not the average
listener, but those people willing to make bets. Remaining biases, such as
the overconfidence evident in figure 1, would be reduced by technical and
other trading specialists.
Cold fusion businesses would have been less risky to start. As it was, a
new fusion business had to bet both that cold fusion was real, and that
they were the best group to develop and market it in that case. With idea
futures they could, by both starting a business and betting against cold
fusion (essentially taking out insurance), really only be betting on their
ability to develop cold fusion if it were real.
Insights from a great many people whose opinions on the cold fusion
controversy were ignored, such as inarticulate people and those without
Ph.Ds, could have been integrated in a decentralized manner. Popular play
would end up subsidizing professional efforts on questions of popular
interest, offering more "direct democracy" in setting research priorities.
Once upon a time the Great Science Foundation decided it would be a "good
thing" to know the mass of the electron neutrino. Instead of trying to
figure out who would be a good person to work on this, or what a good
research strategy would be, they decided to just subsidize betting markets
on the neutrino mass. They spent millions.
Soon the market odds were about 5% that the mass was above 0.1eV, and Gung
Ho Labs became intrigued by the profits to be made. They estimated that
for about $300K spent on two researchers over 3 years, they could make a
high confidence measurement of whether the mass was above 0.1eV. So they
went ahead with the project, and later got their result, which they kept
very secret. While the market now estimated the chance of a mass over
0.1eV at 4%, their experiment said the chance was at most 0.1%.
So they quietly bought bets against a high mass, moving the price down to
2.5% in the process. They then revealed their results to the world, and
tried their best to convince people that their experiment was solid. After
a few months they mostly succeeded, and when the price had dropped to 0.7%
they began to sell they bets they had made. They made $400K off of the
information they had created, which more than covered their expenses to get
that information.
Or course if Gung Ho Labs had failed to convince the world of their
results, they would have faced the difficult choice of quitting at a loss,
or holding out for the long-term. No doubt a careful internal review would
be conducted before making such a decision.
Gung Ho would be free to use peer review, tenure, and fixed salaries
internally, if they are effective ways to organize workers. The two
researchers need not risk their life savings to be paid for their efforts.
But the discipline of the external market should keep these internal
institutions from degenerating into mere popularity contests.
Munchem had moved the market odds of deadly peanut butter up rather high.
LIE now had two choices; either they could use overwhelming cash to move
the odds back down, or use competing studies, advertising, etc. to persuade
others to bet on their side.
If they bet alone, they would know they were throwing their money away with
no obvious limit on future spending. Not only might Munchem find allies,
but LIE employees who knew they were bluffing might be tempted to pick up a
little free money with some anonymous bets. If word of Lunch's bluff got
out, as insider information often does, investors would flock in and wipe
out the effect of LIE's bets.
If LIE tried to throw away other people's money through a persuasion
campaign, they would face a market dominated, as most liquid markets are,
by battle-hardened speculators. These investors, not easily persuaded by
clever jingles, would quickly hook up with research insiders, who generally
know which labs tend to find whatever results their funders want.
So in the end, Lunch Industries accepted the market odds, and began
research on non-toxic peanut butter.
Neutrino Mass
Betting markets could also function in the absence of overt
controversy, as in the following (hypothetical) story.
Killer Peanut Butter
Once upon another time, Munchem Biolabs found
compelling evidence that peanut butter was more deadly than most
pesticides, a conclusion that Lunch Industries Exclusive (LIE) wanted
desperately to suppress. LIE's usual procedure was to fund a bunch of
competing studies to come to opposite conclusions, which usually kept the
waters muddy enough that legislators and customers would ignore it all.
But this time they had to deal with an idea futures market on the question,
and the public was beginning to take the odds in such markets seriously.
These are available in case they would help respond to questions.
Why it works:
Problems
Robin read read the above talk, largely word for word, in English, and
it was transalted into Japanese on the fly. Following presenting the
above talk, Robin Hanson and Joichi Ito
discussed the topic informally in English.