- Futarchy
Futarchy is a form of
government proposed by economistRobin Hanson , in which elected officials define measures of national welfare andprediction market s are used to determine which policies will have the most positive effect.GDP+
GDP+ is used to measure national welfare. One metric that has been proposed is a combination of
Gross domestic product andquality of life .Criticisms
Economist Tyler
Cowen said"I would bet against the future of futarchy, or its likelihood of succeeding were it in place. Robin says 'vote on values, bet on beliefs', but I don't think values and beliefs can be so easily separated." [http://www.marginalrevolution.com/marginalrevolution/2007/08/where-do-i-disa.html]
Opacity Problem
The opacity problem occurs when there is collusion between the bettors and the policy proposers. It was first pointed out by Tom Breton.
The Opacity Problem is that someone - let's call her Alice - might make a proposal that is deliberately very difficult to understand and that has the effect of benefitting her personally. She might even make a proposal that consists of encrypted text and boilerplate that says to enact whatever the encrypted text says.
Bettors would be wary of betting for or against that proposal, because they don't know what's in it and Alice does. They couldn't even be sure that the proposal was bad, because Alice could have cloned a known good proposal. If they bet that it was bad, Alice could bet that it was good and then reveal the encryption key and make a profit at their expense.
Since bettors other than Alice fear to participate, she can in effect dictate the price. Since the price or some function of the price determines what is enacted,she can enact a self-serving proposal.
External links
* [http://hanson.gmu.edu/futarchy.html Futarchy: Vote values, but bet beliefs] (Robin Hanson)
* [http://hanson.gmu.edu/futarchy.pdf Shall we vote on values, but bet on beliefs] (Academic paper by Robin Hanson)
* [http://www.stat.columbia.edu/~cook/movabletype/archives/2005/11/questions_about.html Questions about Futarchy] (Samantha Cook, November 21, 2005)
* [http://goodmorningeconomics.wordpress.com/2008/05/11/society-underinvests-in-institutional-experimentation/ Society underinvests in institutional experimentation]
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