Economist Robin Hanson has proposed a partial replacement for democracy called Futarchy. Instead of voting on what we want to do and how we should do it, under Futarchy, we would vote on what we want to do, but let prediction markets tell us the policies that would best accomplish our goals. Whatever the prediction markets say would be enacted into law. Who has better incentives for selecting policies that would accomplish our goals: individual voters under democracy or individual traders in Futarchy?
A) voters under democracy
B) traders under Futarchy
C) They both have the same incentives.
D) Neither of them has any incentive.

Question

Quizplus · Accepted Answer

Traders in prediction markets have incentives based on their own money at stake, which gives them a strong incentive to gather and analyze all available information, make accurate predictions, and select policies that would actually achieve the goals of the voters. In contrast, voters in democracy may not have strong incentives to become well-informed about policy options or to prioritize the long-term interests of society over their immediate interests. Therefore, Futarchy may offer better incentives for policy selection.

Economist Robin Hanson Has Proposed a Partial Replacement for Democracy