The Right Coast
December 09, 2005
I predict a bright future for prediction markets
By Tom Smith
I am proud to have been named to the board of advisors of the new Washington Stock Exchange. This comes about through the good offices of prediction market legal expert and pal Tom Bell. Thanks, Tom!
The WSX is a prediction market for political events, such as the outcome of elections. If laws can be changed to permit these sorts of markets to operate with real money, ordinary people will be able to take positions on political events, and maybe much else besides. Markets have astonishing powers to process information. People should be able to have fun, hedge risks, and contribute to collective knowledge at the same time.
There is also a natural synergy between prediction markets and blogs. Bloggers spend a lot of time speculating on what is going to happen. I would think something like 'beating the prediction market' should and maybe someday will give you as much cachet in the blogo-punditocracy (sorry) as beating the S&P 500 gives you in the investing world.