Predictocracy: Market Mechanisms for Public and Private Decision Making (Hardcover)

~ (Author)
Key Phrases: public corporations, market scoring rule, post decision makers, United States, The Media, Policy Analysts (more...)

Editorial Reviews

Review

"Decision markets will one day revolutionize governance, both public and private, and Michael Abramowicz''s Predictocracy is the first book length exploration of them-a wild roller coaster ride through the many strange wonders to be found in this vast new territory."-Robin Hanson, Associate Professor, Economics, George Mason University (Robin Hanson )

"A terrific and forward-looking book in which imagination and insight come at the reader as fast as prediction markets are growing."-Saul Levmore, Dean & William B. Graham Professor of Law, University of Chicago (Saul Levmore )

"Will Hillary or Arnold ever be elected? Will Die Hard VIII be a hit? Will the HP merger go through? Will Sanjaya be voted off this week? Our best evidence on all these questions increasingly comes from prediction markets. We already live in a world where orange juice future prices can usefully supplement the best government weather predictions. But Predictocracy shows that we''re just scratching the surface of what can be done with this powerful tool. Abramowicz''s inventive mind shows new ways to design prediction markets and radically new domains to predict. In this new world, peer reviewed journals, legal restatements, even deliberative democracy may ultimately be guided by the force of predictive bets."-Ian Ayres, Professor, Yale Law School and author of Super Crunchers: Why Thinking-By-Numbers is the New Way to be Smart (Ian Ayres )

"Abramowicz argues that prediction markets could be used to improve forecasts and help with decision making in almost any field. . . . [He] argues persuasively that they have merit and that policy makers and researchers should experiment with them to assess their value for decision making. Recommended."-Choice (Choice )

Product Description

Predicting the future is serious business for virtually all public and private institutions, for they must often make important decisions based on such predictions. This visionary book explores how institutions from legislatures to corporations might improve their predictions and arrive at better decisions by means of prediction markets, a promising new tool with virtually unlimited potential applications.

 

Michael Abramowicz explains how prediction markets work; why they accurately forecast elections, sports contests, and other events; and how they may even advance the ideals of our system of republican government. He also explores the ways in which prediction markets address common problems related to institutional decision making. Throughout the book the author extends current thinking about prediction markets and offers imaginative proposals for their use in an array of settings and situations.

 

(20080821)

See all Editorial Reviews

---

Product Details Hardcover: 368 pages Publisher: Yale University Press (January 29, 2008) Language: English ISBN-10: 0300115997 ISBN-13: 978-0300115994 Product Dimensions: 9.4 x 6.2 x 0.7 inches Shipping Weight: 1.5 pounds (View shipping rates and policies) Average Customer Review: 4.0 out of 5 stars  See all reviews (2 customer reviews) Amazon.com Sales Rank: #853,845 in Books (See Bestsellers in Books)

---

More About the Author

Discover books, learn about writers, read author blogs, and more.

› Visit Amazon's Michael Abramowicz Page

Front Cover | Table of Contents | First Pages | Index | Surprise Me!

Search Inside This Book:

---

Inside This Book (learn more)

Key Phrases - Statistically Improbable Phrases (SIPs): (learn more)
public corporations, market scoring rule, post decision makers, prediction market design, prediction market participants, prediction market mechanisms, other prediction markets, seed wager, such prediction markets, prediction market forecasts, using prediction markets, tradable contracts, market adjudication, predictive decision making, prediction markets work, market payouts, market sponsor, billion prediction, policy analysis organizations, assessment aggregation, prediction market prices, conditional markets, traditional adjudication, probability spectrum, market subsidy

Key Phrases - Capitalized Phrases (CAPs): (learn more)
United States, The Media, Policy Analysts, Administrative Agencies, Regulatory Bodies, Legislative Bodies, Iowa Electronic Markets, Delphi Method, Supreme Court, Robin Hanson, Buzz Game, Foresight Exchange, Arrow's Theorem, Date Figure, Empire State Building, Hollywood Stock Exchange, Nobel Prize, Green Party, Social Security, Action Abramowitz, World Series, John Maynard Keynes, New York, Robert Shiller, Love Canal

Browse Sample Pages:
Front Cover | Table of Contents | First Pages | Index | Surprise Me!

Search Inside This Book:

---

What Do Customers Ultimately Buy After Viewing This Item?

	80% buy the item featured on this page: Predictocracy: Market Mechanisms for Public and Private Decision Making 4.0 out of 5 stars (2) $50.00
	8% buy The Future of Everything: The Science of Prediction 4.6 out of 5 stars (14) $12.89
	5% buy Information Markets: A New Way of Making Decisions 4.7 out of 5 stars (3) $25.00
	4% buy Nudge: Improving Decisions About Health, Wealth, and Happiness 3.6 out of 5 stars (116) $10.83

Explore similar items

---

Tags Customers Associate with This Product  (What's this?) Click on a tag to find related items, discussions, and people. Check the boxes next to the tags you consider relevant or enter your own tags in the field below.  forecasting(2) decision-making(1) democracy(1) Agree with these tags? Your tags: Add your first tag

Search Products Tagged with   See most popular tags

---

Sell a Digital Version of This Book in the Kindle Store

If you are a publisher or author and hold the digital rights to a book, you can sell a digital version of it in our Kindle Store. Learn more

---

 

Customer Reviews

2 Reviews 5 star:    (0) 4 star:  (2) 3 star:    (0) 2 star:    (0) 1 star:    (0)           Average Customer Review 4.0 out of 5 stars (2 customer reviews)		Share your thoughts with other customers:
Most Helpful Customer Reviews 3 of 3 people found the following review helpful: 4.0 out of 5 stars Almost a great book , April 25, 2008 By  Peter McCluskey (Mountain View, CA USA) - See all my reviews (REAL NAME)    This had the potential to be an unusually great book, which makes its shortcomings rather frustrating. It is loaded with good ideas, but it's often hard to distinguish the good ideas from the bad ideas, and the arguments for the good ideas aren't as convincing as I hoped. The book's first paragraph provides a frustratingly half-right model of why markets produce better predictions than alternative institutions, involving a correlation between confidence (or sincerity) and correctness. If trader confidence was the main mechanism by which markets produce accurate predictions, I'd be pretty reluctant to believe the evidence that Abramowicz presents of their success. Sincerity is hard to measure, so I don't know what to think of its effects. A layman reading this book would have trouble figuring out that the main force for accurate predictions is that the incentives alter traders' reasoning so that it becomes more accurate. The book brings a fresh perspective to an area where there are few enough perspectives that any new perspective is valuable when it's not clearly wrong. He is occasionally clearer than others. For instance, his figure 4.1 enabled me to compare three scoring rules in a few seconds (I'd previously been unwilling to do the equivalent by reading equations). He advocates some very fine-grained uses of prediction markets (PMs), which is a sharp contrast to my expectation that they are mainly valuable for important issues. Abramowicz has a very different intuition than I do about how much it costs to run a prediction market for an issue that people normally don't find interesting. For instance, he wants to partly replace small claims court cases with prediction markets for individual cases. I'm fairly sure that obvious ways to do that would require market subsidies much larger than current court costs. The only way I can imagine PMs becoming an affordable substitute for small claims courts would be if most of the decisions involved were done by software. Even then it's not obvious why one or more PM per court case would be better than a few more careful evaluations of whether to turn those decisions over to software. He convinced me that Predictocracy will solve a larger fraction of democracy's problems than I initially expected, but I see little reason to believe that it will work as well as Futarchy will. I see important classes of systematic biases (e.g. the desire of politicians and bureaucrats to acquire more power than the rest of us should want) that Futarchy would reduce but which Predictocracy doesn't appear to alter. His description of why short-term PMs may be more resistant to bubbles than stock markets was discredited just as it was being printed. His example of deluded Green Party voters pushing their candidate's price too high is a near-perfect match for what happened with Ron Paul contracts on Intrade. What Abramowicz missed is that traders betting against Paul needed to tie up a lot more money than traders betting for Paul. High volume futures markets have sophisticated margin rules which mostly eliminate this problem. I expect that low-volume PMs can do the same, but it isn't easy and companies such as Intrade have only weak motivation to do this. [...] 5 of 6 people found the following review helpful: 4.0 out of 5 stars Predictocracy Review, February 27, 2008 By  Alexander Kirtland "UsableMarkets" (Brooklyn, NY United States) - See all my reviews (REAL NAME)    Michael Abrahmowicz, in his new book, Predictocracy: Market Mechanisms for Public and Private Decision Making, resembles nothing so much as a nutritionist. He takes a piece of fruit (prediction markets, in case you're missing the metaphor) analyzes it in great detail, explains how it works, what makes it good for us, and then proceeds to compare it to other fruits, one by one, showing how they can be combined to make better meals for us, and so on. Which is all well and good, except that sometimes one gets the feeling he's a nutritionist on another planet, not Earth. Abrahmowicz himself notes the oddity of his exercise. He says: "From the vantage point of today predictocracy is political science fiction. ... And like most science fiction, it seems extraordinarily unlikely to happen." Not that readers of this blog (and readers of his book, and followers of political elections), aren't familiar with prediction markets. Indeed, some of us are perhaps too familiar. Rather, the idea that we would let prediction markets determine some of the things that Abrahmowicz suggests is not right or wrong, just strange. For example, using prediction markets to derive legal decisions, while perfectly logical (as he explains it), just seems like it would encounter a tad bit of resistance (from, say, everyone). At one point Abrahmowicz says "The more ambitious aim of this book has been to argue that bets may often be the best building blocks for institutions," which can only open himself to accusations of proposing not Predictocracy, but Vegasocracy. This strangeness, and seeming denial of reality, at moments punctuate the book, such as this moment when Abrahmowicz discusses how prediction markets could be used in a severe crisis (such as New Orleans) to determine what actions to take (to evacuate or not to evacuate). "To be sure, prediction markets will not eliminate the need for some individual decision making, particularly in contexts in which individual officials on the ground must make decisions without the ability or time to consult with superiors [who would be relying on prediction markets]. It will not be practical for a police officer who sees looting to consult the prediction market to determine whether she should arrest looters or allocate scarce time to helping people in need." Indeed. In fairness, Abrahmowicz knows that people will see many of his ideas as impractical and weird. This is why he states: "Already we have seen other market mechanisms assume increasing importance in governance. The notion of pollution trading markets at one time must have seemed bizarre, in part because such markets were so different from previous models of government regulation. " But perhaps this also leads to the shotgun approach of the book. Multiple ideas in multiple contexts are described and explored, none sticking around long enough to attract too much (unwanted?) attention. The book is a veritable trove of information about legal thinking, and more, but so many ideas are touched it seems hard to know where Abrahmowicz's focus is. Perhaps preferable would have been if he had selected a few, slightly more realistic ideas, where prediction markets would seem likely to be accepted and where they could provide great value, and then explore those ideas in detail and great length. Instead we are left with a smorgasboard of ideas ... all eminently interesting, no doubt, but .... That said, how can I not love a book about prediction markets. From the point of view of watching an expert take a powerful idea, turning it over in his hands and examining all the angles, the book is a delight. Strip away all the talk of policy and normative analysis and one is left with an interesting essay of ideas. In particular his discussion of how prediction markets are different from the stock market in terms of being less vulnerable to inefficiencies (The Danger of Inefficient Markets on page 215) is a delight. In fact, one hopes that Abrahmowicz decides to rewrite this book with some snappier prose and for a wider (non-policy/non-academic) audience. That would be a great little book. http://www.usablemarkets.com/?p=236		Ad feedback   Search Customer Reviews Only search this product's reviews

---

Customer Discussions

This product's forum Discussion Replies Latest Post No discussions yet Ask questions, Share opinions, Gain insight Start a new discussion Topic: First post: Receive e-mail when new posts are made Prompts for sign-in   Guidelines Active discussions in related forums Discussion Replies Latest Post religion Jungian Atheists? 18 1 minute ago religion Deconversion 180 20 minutes ago religion is it just me? 43 22 minutes ago economics Economic/finance books for a birthday present 6 7 hours ago economics The Bailout Reader 9 7 hours ago textbook Anyone need psychology testbook- trying to sell a used copy 0 13 hours ago textbook textbook scam 70 15 hours ago Search Customer Discussions Search all Amazon discussions

The Democracy community Latest activity 19 hours ago 1,306 customers have contributed 1,121 products, 86 lists & guides and more... › Explore the community The Economics community Latest activity 14 hours ago 6,659 customers have contributed 5,005 products, 200 discussions and more... › Explore the community The Decision-making community Latest activity 2 days ago 486 customers have contributed 283 products, 25 lists & guides and more... › Explore the community Related forums decision-making democracy (2 discussions) economics (200 discussions) forecasting religion (1023 discussions) textbook (19 discussions) Explore more › See all Customer Communities › Your communities

---

Listmania!

Understanding Politics and Technology: A list by Garrett Graff   Creativity and Innovation: A list by Keith Sawyer   Business Leadership Must-Reads: A list by Walter H. Bock "Wally Bock - Author, Blogger, Consultant and Coach" Create a Listmania! list

Search Listmania!

---

So You'd Like to...

Achieve the Attitude of Excellence: Superior Results: A guide by Daniel Grissom   Learn about Morality, Freedom, and the Meaning of Life: A guide by Hagios   LEARN BUSINESS LESSONS FROM NON-BUSINESS BOOKS: A guide by Shashank Tripathi Create a guide

Search Guides

---

Product Information from the Amapedia Community

Beta (What's this?)

Be the first person to add an article about this item at Amapedia.com.

› See featured Amapedia.com articles

---

Look for Similar Items by Category

• Books > Business & Investing > Management & Leadership > Decision-Making & Problem Solving
• Books > Business & Investing > Management & Leadership > Planning & Forecasting
• Books > Business & Investing > Management & Leadership > Strategy & Competition
• Books > Business & Investing > Popular Economics
• Books > Religion & Spirituality > New Age > Divination

---

Look for Similar Items by Subject

Search Books by subject:
Business strategy
Social forecasting, futurology
Business Forecasting
Economic Forecasting
Business & Economics
Business / Economics / Finance
Business/Economics
Business & Economics / Decision-Making & Problem Solving
Business & Economics / General
Decision Making & Problem Solving
General
Forecasting
Decision making
Economics: Professional & General


i.e., each book must be in subject 1 AND subject 2 AND ...

Ad feedback

 

Feedback If you need help or have a question for Customer Service, contact us.  Would you like to update product info or give feedback on images? Is there any other feedback you would like to provide? Your comments can help make our site better for everyone. Please note that we are unable to respond directly to all feedback submitted via this form, but we'll ask you to sign in so we can contact you if needed.

Your Recent History

 (What's this?)

After viewing product detail pages or search results, look here to find an easy way to navigate back to pages you are interested in.

› View and edit your browsing history

Get to Know Us Careers Investor Relations Press Releases Amazon and Our Planet Make Money with Us Sell on Amazon Join Associates Self-publish with Us › See all Let Us Help You Shipping Rates & Policies Amazon Prime Returns Help

Canada | China | France | Germany | Japan | United Kingdom  And don't forget: Amazon Windowshop | AmazonWireless | Askville | Audible | DPReview | Endless | IMDb | Shopbop | SoundUnwound | Warehouse Deals by Amazon | Zappos Conditions of Use | Privacy Notice  © 1996-2009, Amazon.com, Inc. or its affiliates

Product Details

• Hardcover: 368 pages
• Publisher: Yale University Press (January 29, 2008)
• Language: English
• ISBN-10: 0300115997
• ISBN-13: 978-0300115994
• Product Dimensions: 9.4 x 6.2 x 0.7 inches
• Shipping Weight: 1.5 pounds (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (2 customer reviews)
• Amazon.com Sales Rank: #853,845 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

3 of 3 people found the following review helpful:

4.0 out of 5 stars Almost a great book , April 25, 2008

By	Peter McCluskey (Mountain View, CA USA) - See all my reviews (REAL NAME)

This had the potential to be an unusually great book, which makes its shortcomings rather frustrating. It is loaded with good ideas, but it's often hard to distinguish the good ideas from the bad ideas, and the arguments for the good ideas aren't as convincing as I hoped.
The book's first paragraph provides a frustratingly half-right model of why markets produce better predictions than alternative institutions, involving a correlation between confidence (or sincerity) and correctness. If trader confidence was the main mechanism by which markets produce accurate predictions, I'd be pretty reluctant to believe the evidence that Abramowicz presents of their success. Sincerity is hard to measure, so I don't know what to think of its effects. A layman reading this book would have trouble figuring out that the main force for accurate predictions is that the incentives alter traders' reasoning so that it becomes more accurate.
The book brings a fresh perspective to an area where there are few enough perspectives that any new perspective is valuable when it's not clearly wrong. He is occasionally clearer than others. For instance, his figure 4.1 enabled me to compare three scoring rules in a few seconds (I'd previously been unwilling to do the equivalent by reading equations).
He advocates some very fine-grained uses of prediction markets (PMs), which is a sharp contrast to my expectation that they are mainly valuable for important issues. Abramowicz has a very different intuition than I do about how much it costs to run a prediction market for an issue that people normally don't find interesting. For instance, he wants to partly replace small claims court cases with prediction markets for individual cases. I'm fairly sure that obvious ways to do that would require market subsidies much larger than current court costs. The only way I can imagine PMs becoming an affordable substitute for small claims courts would be if most of the decisions involved were done by software. Even then it's not obvious why one or more PM per court case would be better than a few more careful evaluations of whether to turn those decisions over to software.
He convinced me that Predictocracy will solve a larger fraction of democracy's problems than I initially expected, but I see little reason to believe that it will work as well as Futarchy will. I see important classes of systematic biases (e.g. the desire of politicians and bureaucrats to acquire more power than the rest of us should want) that Futarchy would reduce but which Predictocracy doesn't appear to alter.
His description of why short-term PMs may be more resistant to bubbles than stock markets was discredited just as it was being printed. His example of deluded Green Party voters pushing their candidate's price too high is a near-perfect match for what happened with Ron Paul contracts on Intrade. What Abramowicz missed is that traders betting against Paul needed to tie up a lot more money than traders betting for Paul. High volume futures markets have sophisticated margin rules which mostly eliminate this problem. I expect that low-volume PMs can do the same, but it isn't easy and companies such as Intrade have only weak motivation to do this.
[...]

5 of 6 people found the following review helpful:

4.0 out of 5 stars Predictocracy Review, February 27, 2008

By	Alexander Kirtland "UsableMarkets" (Brooklyn, NY United States) - See all my reviews (REAL NAME)

Michael Abrahmowicz, in his new book, Predictocracy: Market Mechanisms for Public and Private Decision Making, resembles nothing so much as a nutritionist. He takes a piece of fruit (prediction markets, in case you're missing the metaphor) analyzes it in great detail, explains how it works, what makes it good for us, and then proceeds to compare it to other fruits, one by one, showing how they can be combined to make better meals for us, and so on. Which is all well and good, except that sometimes one gets the feeling he's a nutritionist on another planet, not Earth.

Abrahmowicz himself notes the oddity of his exercise. He says: "From the vantage point of today predictocracy is political science fiction. ... And like most science fiction, it seems extraordinarily unlikely to happen."

Not that readers of this blog (and readers of his book, and followers of political elections), aren't familiar with prediction markets. Indeed, some of us are perhaps too familiar. Rather, the idea that we would let prediction markets determine some of the things that Abrahmowicz suggests is not right or wrong, just strange.

For example, using prediction markets to derive legal decisions, while perfectly logical (as he explains it), just seems like it would encounter a tad bit of resistance (from, say, everyone).

At one point Abrahmowicz says "The more ambitious aim of this book has been to argue that bets may often be the best building blocks for institutions," which can only open himself to accusations of proposing not Predictocracy, but Vegasocracy.

This strangeness, and seeming denial of reality, at moments punctuate the book, such as this moment when Abrahmowicz discusses how prediction markets could be used in a severe crisis (such as New Orleans) to determine what actions to take (to evacuate or not to evacuate).

"To be sure, prediction markets will not eliminate the need for some individual decision making, particularly in contexts in which individual officials on the ground must make decisions without the ability or time to consult with superiors [who would be relying on prediction markets]. It will not be practical for a police officer who sees looting to consult the prediction market to determine whether she should arrest looters or allocate scarce time to helping people in need."

Indeed.

In fairness, Abrahmowicz knows that people will see many of his ideas as impractical and weird. This is why he states:

"Already we have seen other market mechanisms assume increasing importance in governance. The notion of pollution trading markets at one time must have seemed bizarre, in part because such markets were so different from previous models of government regulation. "

But perhaps this also leads to the shotgun approach of the book. Multiple ideas in multiple contexts are described and explored, none sticking around long enough to attract too much (unwanted?) attention. The book is a veritable trove of information about legal thinking, and more, but so many ideas are touched it seems hard to know where Abrahmowicz's focus is.

Perhaps preferable would have been if he had selected a few, slightly more realistic ideas, where prediction markets would seem likely to be accepted and where they could provide great value, and then explore those ideas in detail and great length. Instead we are left with a smorgasboard of ideas ... all eminently interesting, no doubt, but ....

That said, how can I not love a book about prediction markets. From the point of view of watching an expert take a powerful idea, turning it over in his hands and examining all the angles, the book is a delight.

Strip away all the talk of policy and normative analysis and one is left with an interesting essay of ideas. In particular his discussion of how prediction markets are different from the stock market in terms of being less vulnerable to inefficiencies (The Danger of Inefficient Markets on page 215) is a delight. In fact, one hopes that Abrahmowicz decides to rewrite this book with some snappier prose and for a wider (non-policy/non-academic) audience. That would be a great little book.

http://www.usablemarkets.com/?p=236