Comment Text:
Dear CFTC Commissioners,
I am a professor of economics at Harvard University. Prediction markets are a valuable societal tool that enables households and businesses to estimate the likelihood of important events, including the outcomes of elections. I teach my students to use predictions markets to improve the sophistication of their decisions. I specifically use prediction markets about election outcomes as a teaching example. Many students are overwhelmingly overconfident about the likely outcome of elections, typically biased in ways that align with their own political preferences (e.g., "candidate X is terrible, so candidate Y, my preferred candidate, is going to be elected"). Prediction markets help people overcome this bias by understanding that many other people do not share their forecasts. Based on the available evidence, prediction markets are a far better predictor of election outcomes than surveys of voters. Moreover, prediction markets and voter surveys are complementary sources of predictive power. I endorse Kalshi's request to allow trading in election prediction markets.
Sincerely yours,
David Laibson
Professor of Economics, Harvard University
