Prediction markets – The daily blog of behavioral and cognitive economics

On Prediction Market Regulation

As an economist, not a lawyer, I write here on public interest, not what is legal. Like all financial markets, prediction markets can serve many functions, such as moving and cutting risk, collecting and sharing information, and the fun of action and proving yourself in competition. For decades, that risk function was the only one U.S. regulators allowed as a justification, but I’ve long argued for a huge potential info value, far more than what we now realize. I want these markets to grow toward that potential. While I personally don’t mind people having fun, I see that others mind, and we might have to compromise there. ….[READ]