AltInst: Vote on Values, But Bet on Beliefs

This non-technical paper proposes a new form of government.
Comments welcome, though no rush as I'll be on vacation for the next three
weeks.

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http://hanson.gmu.edu/futarchy.pdf or .ps

             Shall We Vote on Values, But Bet on Beliefs?
                       Robin Hanson, July 2000

A key question to ask about any social institution is how well it generates,
aggregates, and distributes information. Speculative markets seem to do
very well at this, while familiar democratic institutions, relying in part
on academic institutions, seem to fail in many ways. ``Futarchy" is a form
of government in which betting markets become our primary common source on
matters of fact, as opposed to value. Elected representatives would
formally define and manage the after the fact measurement of national
welfare, e.g. "GDP+," while market speculators would say which policies they
expect to raise national welfare. Democracy would say what we want, while
speculators would say how to get it. If we are willing to recommend
policies that macro data suggest are causally related to GDP, it seems we
should be willing to consider futarchy. Using an engineering-style
approach, this paper considers twenty five design issues with futarchy, and
then presents a relatively specific proposal in response.
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Robin Hanson rhanson@gmu.edu http://hanson.gmu.edu
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030
703-993-2326 FAX: 703-993-2323

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Received on Thu Jul 27 11:54:09 2000