Comment Text:
Political betting markets provide extremely useful signaling functions
to both to the general electorate and to politicians themselves.
They are a classic example of the usefulness of aggregated knowledge,
otherwise known as the wisdom of crowds. They are legal in many
countries throughout the world and were legal and very popular
in the United States in the early twentieth century.
Since placing money on a political prediction requires
"skin in the game", an actual stake of value, the information gained by
a political prediction can contain more value than a simple poll,
in which respondents can lie or provide less than completely truthful
responses for numerous reasons including typical human biases
and wanting to "sabotage" the other side. With more accurate data,
politicians are better able to tailor their campaigns to voters and their interests.
The electorate in turn is better off having politicians who better
understand their concerns. The entire political process becomes more
data driven and efficient.
Concerns about corruption can be easily handled with simple but strong
regulations and limitations. The information gleaned from the
power of predictive markets is most effective and useful in the type of chaotic
political environment in which we find ourselves today. Their use would be a
clear benefit to the field of political science and to the American political process.
