Philip E. Tetlock: commitment

Transcript context

…Right. How do you think about financial markets in relation to your work on super predictors? Are financial markets, in essence, super predictors to begin with? Or can super predictors, on average, beat financial markets? Oh, boy! [laughs] We play with prediction markets with the work with the intelligence community, going all the way back to Admiral Poindexter and the original DARPA effort to launch prediction markets inside the intelligence community. I think your colleague, Robin Hanson, was involved with some of that work around 2000. I would say around 2003, 2004 — in that range. We’ve also been working with the prediction markets in parallel with forecasting tournaments, and there are pros and cons to each method of eliciting judgments. But the IC, the intelligence community, doesn’t let us make those markets deep and liquid the way they are on Wall Street. People are essentially competing for reputational points the way they are in forecasting tournaments, and monetary prizes are either small or nonexistent. So most economists, I think, would not consider that to be a very robust test of the efficacy of prediction markets. And when prediction markets fall short — and they do typically not perform quite as well as forecasting tournaments — when they fall short, it’s hardly a decisive rebuke of the market mechanism for eliciting forecast. There are lots of very powerful institutional actors like Goldman Sachs and so forth that are continually trying to do exactly what you describe. It’s an ongoing process. You’re an economist. I don’t need to tell you that. Sure. There are implicit prediction markets in, say, coronavirus, say, prices of airline stocks, right? And those are very liquid. They’ve been very thickly traded lately.…

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