Abstract

http://ssrn.com/abstract=984584
 
 

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Statement on Prediction Markets


Kenneth J. Arrow


Stanford University - Department of Economics

Shyam Sunder


Yale University - School of Management

Robert Forsythe


University of South Florida - College of Business

Robert E. Litan


Ewing Marion Kauffman Foundation; AEI-Brookings Joint Center for Regulatory Studies

Eric Zitzewitz


Dartmouth College; NBER

Michael Gorham


Illinois Institute of Technology

Robert W. Hahn


University of Oxford, Smith School; Georgetown University

Robin Hanson


George Mason University; Oxford University - Future of Humanity Institute

Daniel Kahneman


Princeton University

John O. Ledyard


California Institute of Technology - Division of the Humanities and Social Sciences

Saul Levmore


University of Chicago Law School

Paul R. Milgrom


Stanford Graduate School of Business

Forrest D. Nelson


University of Iowa - Henry B. Tippie College of Business - Department of Economics

George R. Neumann


University of Iowa - Henry B. Tippie College of Business - Department of Economics

Marco Ottaviani


Northwestern University - Kellogg School of Management

Charles R. Plott


California Institute of Technology - Division of the Humanities and Social Sciences

Thomas C. Schelling


University of Maryland

Robert J. Shiller


Yale University - Cowles Foundation; National Bureau of Economic Research (NBER); Yale University - International Center for Finance

Vernon L. Smith


Chapman University - Economic Science Institute; Chapman University School of Law

Erik C. Snowberg


Independent

Cass R. Sunstein


Harvard Law School

Paul C. Tetlock


Columbia Business School - Finance and Economics

Philip E. Tetlock


University of California, Berkeley - Organizational Behavior & Industrial Relations Group; University of Pennsylvania - Management Department

Hal R. Varian


University of California, Berkeley - School of Information; University of California, Berkeley - Operations and Information Technology Management Group; National Bureau of Economic Research (NBER)

Justin Wolfers


University of Michigan at Ann Arbor - Department of Economics; The Ford School of Public Policy, University of Michigan; The Brookings Institution; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Kiel Institute for the World Economy

May 2007

AEI-Brookings Joint Center Related Publication No. 07-11

Abstract:     
Prediction markets are markets for contracts that yield payments based on the outcome of an uncertain future event, such as a presidential election. Using these markets as forecasting tools could substantially improve decision making in the private and public sectors.

We argue that U.S. regulators should lower barriers to the creation and design of prediction markets by creating a safe harbor for certain types of small stakes markets. We believe our proposed change has the potential to stimulate innovation in the design and use of prediction markets throughout the economy, and in the process to provide information that will benefit the private sector and government alike.

Number of Pages in PDF File: 8

Keywords: prediction markets, public policy, forecasting, regulation

JEL Classification: D61, D70

working papers series


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Date posted: May 7, 2007  

Suggested Citation

Arrow, Kenneth J. and Sunder, Shyam and Forsythe, Robert and Litan, Robert E. and Zitzewitz, Eric and Gorham, Michael and Hahn, Robert W. and Hanson, Robin and Kahneman, Daniel and Ledyard, John O. and Levmore, Saul and Milgrom, Paul R. and Nelson, Forrest D. and Neumann , George R. and Ottaviani, Marco and Plott, Charles R. and Schelling, Thomas C. and Shiller, Robert J. and Smith, Vernon L. and Snowberg, Erik C. and Sunstein, Cass R. and Tetlock, Paul C. and Tetlock, Philip E. and Varian, Hal R. and Wolfers, Justin, Statement on Prediction Markets (May 2007). AEI-Brookings Joint Center Related Publication No. 07-11. Available at SSRN: http://ssrn.com/abstract=984584 or http://dx.doi.org/10.2139/ssrn.984584

Contact Information

Kenneth J. Arrow
Stanford University - Department of Economics ( email )
Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
Shyam Sunder
Yale University - School of Management ( email )
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-6160 (Phone)
203-432-6974 (Fax)
HOME PAGE: http://www.som.yale.edu/faculty/sunder/
Robert Forsythe
University of South Florida - College of Business ( email )
Tampa, FL 33620-5500
United States
813-974-3229 (Phone)
813-974-3030 (Fax)
Robert E. Litan (Contact Author)
Ewing Marion Kauffman Foundation ( email )
4801 Rockhill Road
Kansas City, MO 64110
United States
AEI-Brookings Joint Center for Regulatory Studies
1150 17th Street, N.W.
Washington, DC 20036
United States
Eric W. Zitzewitz
Dartmouth College ( email )
Hanover, NH 03755
United States
603-646-2891 (Phone)
603-646-2122 (Fax)
HOME PAGE: http://www.dartmouth.edu/~ericz
NBER ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
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Michael Gorham
Illinois Institute of Technology ( email )
Stuart Graduate School of Business
565 W. Adams St.
Chicago, IL 60661
United States
Robert W. Hahn
University of Oxford, Smith School ( email )
Oxford
United Kingdom
Georgetown University
Georgetown Center for Business and Public Policy
Washington, DC 20057
United States
Robin Hanson
George Mason University ( email )
MS 1D3, Carow Hall
4400 University Dr.
Fairfax, VA 22030-4444
United States
703-993-2326 (Phone)
703-993-2323 (Fax)
HOME PAGE: http://hanson.gmu.edu
Oxford University - Future of Humanity Institute ( email )
Suite 8, Littlegate House
16/17 St Ebbe's Street
Oxford, OX1 1PT
United Kingdom
Daniel Kahneman
Princeton University ( email )
Department of Psychology 3-2-1 Green Hall
Princeton, NJ 08544
United States
609-258-2280 (Phone)
609-258-2809 (Fax)
John O. Ledyard
California Institute of Technology - Division of the Humanities and Social Sciences ( email )
1200 East California Blvd.
228-77
Pasadena, CA 91125
United States
626-395-8482 (Phone)
Saul Levmore
University of Chicago Law School ( email )
1111 E. 60th St.
Chicago, IL 60637
United States
773-702-9590 (Phone)
773-702-0730 (Fax)
Paul R. Milgrom
Stanford Graduate School of Business ( email )
518 Memorial Way
Stanford, CA 94305-5015
United States

Forrest D. Nelson
University of Iowa - Henry B. Tippie College of Business - Department of Economics ( email )
108 Pappajohn Building
Iowa City, IA 52242
United States
(319) 335-0854 (Phone)
George R. Neumann
University of Iowa - Henry B. Tippie College of Business - Department of Economics ( email )
108 Pappajohn Building
Iowa City, IA 52242
United States
319-335-0850 (Phone)
319-356-1956 (Fax)
Marco Ottaviani
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
Charles R. Plott
California Institute of Technology - Division of the Humanities and Social Sciences ( email )
1200 East California Blvd.
337 Baxter Hall
Pasadena, CA 91125
United States
626-395-4209 (Phone)
Thomas C. Schelling
University of Maryland ( email )
College Park, MD 20742
United States
Robert J. Shiller
Yale University - Cowles Foundation ( email )
Box 208281
New Haven, CT 06520-8281
United States
203-432-3708 (Phone)
203-432-6167 (Fax)
HOME PAGE: http://www.econ.yale.edu/~shiller/
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
203-432-3708 (Phone)
Yale University - International Center for Finance ( email )
Box 208200
New Haven, CT 06520
United States
203-432-3708 (Phone)
203-432-6167 (Fax)
Vernon L. Smith
Chapman University - Economic Science Institute ( email )
One University Dr.
Orange, CA 92866
United States
714-628-2830 (Phone)
Chapman University School of Law ( email )
One University Drive
Orange, CA 92866-1099
United States
Erik C. Snowberg
Independent
No Address Available
Cass R. Sunstein
Harvard Law School ( email )
1575 Massachusetts Ave
Areeda Hall 225
Cambridge, MA 02138
United States
617-496-2291 (Phone)
Paul C. Tetlock
Columbia Business School - Finance and Economics ( email )
3022 Broadway
New York, NY 10027
United States
212-854-9895 (Fax)
HOME PAGE: http://www0.gsb.columbia.edu/faculty/ptetlock/

Philip E. Tetlock
University of California, Berkeley - Organizational Behavior & Industrial Relations Group ( email )
Berkeley, CA 94720
United States
University of Pennsylvania - Management Department ( email )
The Wharton School
Philadelphia, PA 19104-6370
United States

Hal R. Varian
University of California, Berkeley - School of Information ( email )
102 South Hall
Berkeley, CA 94720-4600
United States
510-642-9980 (Phone)
510-642-5814 (Fax)
HOME PAGE: http://www.sims.berkeley.edu/~hal/people/hal/biography.html
University of California, Berkeley - Operations and Information Technology Management Group ( email )
545 Student Services Building
Berkeley, CA 94720
United States
510-643-6388 (Phone)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Justin Wolfers
University of Michigan at Ann Arbor - Department of Economics ( email )
611 Tappan Street
Ann Arbor, MI 48109-1220
United States
734-764-2447 (Phone)
HOME PAGE: http://www.nber.org/~jwolfers
The Ford School of Public Policy, University of Michigan ( email )
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Ann Arbor, MI 48109
United States
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HOME PAGE: http://www.nber.org/~jwolfers
The Brookings Institution ( email )
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Washington, DC 20036
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HOME PAGE: http://www.nber.org/~jwolfers
National Bureau of Economic Research (NBER) ( email )
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HOME PAGE: http://www.nber.org/~jwolfers
Institute for the Study of Labor (IZA)
P.O. Box 7240
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HOME PAGE: http://www.iza.org/en/webcontent/personnel/photos/index_html?key=1737
Centre for Economic Policy Research (CEPR)
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CESifo (Center for Economic Studies and Ifo Institute) ( email )
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Kiel Institute for the World Economy ( email )
P.O. Box 4309
Kiel, D-24100
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