• Prediction markets

    • Basic idea: let people make predictions, but put money where mouth is

      • Upside: may be effective way to aggregate (good?) information

      • Upside: incentivizes people to find good/better information

      • Issue: prediction may not be accurate if good information is rare

      • Issue: may be highly vulnerable to non-transparent “insider trading”

      • Issue: when most good information is concentrated among few experts, the trading market may be extremely thin and unreliable

      • Issue: is it “gambling”?  Legal issues, ethical issues, addiction, …

  • Crowdfunding

    • Basic idea/model: announce project, collect small investment commitments

      • Upside: popular, shown to work in many concrete examples

      • Upside: if publicized well, need not rely on large/rich investors

        • Interest base may be more “democratic”, broadly representative

        • More responsive to community than philanthropic pet projects

      • Issue: inherently marketing/publicity driven

        • Most investors don’t have time or expertise for deep analysis

        • Crowds may invest in shiny lemons while ignoring higher-quality but less aggressively-marketed projects

      • Issue: participation may be limited to “binary choice”, accept/reject

        • Can interested people deliberate, dissent, and evolve proposals?

      • Issue: crowdfunders usually don’t collectively “own” the result

        • Missing long-term stake, incentive to maintain, keep participating

      • Issue: does crowdfunding increase or decrease inequality?

        • Some projects explicitly address the needs of “underserved”

        • But rich urban populations tend to have more money to invest, better Internet access and devices with which to participate

      • Issue: does civic crowdfunding work with or against government?

        • Sometimes campaigns are launched by, or with, government

        • Crowdfunding might be misused as unreliable and uneven replacement for representative government infrastructure funding

  • Quadratic voting

    • Basic idea: buy votes for/against a position, but pay the square of # of votes

      • The more you care, the more each additional vote costs

      • Incentive-compatibility argument: reveals how much people care

      • Protection of minority interests: minority who cares a lot can outvote majority who doesn’t care much or at all

      • Issue: vulnerability to “under-the-table” fraud, coercion, vote-buying

        • If I have $4, then that buys only 2 vote if I cast it myself.

        • If I secretly pay $1 each to A,B,C then we collude to yield 4 votes

      • Issue: information asymmetries, vulnerability to distraction politics

        • The majority may be unaware how much they should care

        • Minority trumpets furor over issues they don’t care about, drawing money and votes of majority away from their concerns

      • Issue: self-fulfilling prophecies, “terrorist markets”

        • If you can predict something because you can make it happen…

        • Related: Ring of Gyges “assassination contracts”


Post-lecture blackboard snapshot 2019:



Last modified: Thursday, 3 December 2020, 12:22