Monday, September 11, 2006

Betting on Supreme Court Outcomes

The Washington Stock Exchange (WSX) is back up. WSX is a prediction market, which allows traders to take positions on what the future holds in store, including outcomes of U.S. Supreme Court decisions. As those of you who have read The Wisdom of Crowds know, markets can be very powerful information processing machines for aggregating opinions on future events. If WSX and similar markets prosper, they will create great funds of data for analyzing how courts behave and how they conform to or depart from rational expectations. So, for example, it might turn out that highly political cases are more or less predictable than other sorts of cases, or that individual judges are more or less predictable.


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