After the September 11^th attacks, one division of the Pentagon began to set up a Policy Analysis Market (PAM), a prediction market for political events in the Middle East. United States senators cancelled the program after discovering that it would allow futures contracts for assassinations and terrorist attacks. Had the PAM survived, how might it have helped the United States government? A) by lowering the signal-to-noise ratio in the market B) by tipping off terrorists that they were about to be captured C) by showing the world that we did not know very much about events in foreign countries D) by aggregating dispersed information about political events into a single, readable signal

Question

Quizplus · Accepted Answer

Prediction markets, such as the proposed PAM, aggregate dispersed information from various sources, such as experts, analysts, and traders, into a single market signal. This signal can reveal accurate insights into political events in foreign countries that are difficult to obtain through traditional intelligence gathering methods. Therefore, the PAM could have helped the United States government by providing a valuable source of information for decision-making and policy planning.

After the September 11th Attacks, One Division of the Pentagon

After the September 11^th Attacks, One Division of the Pentagon