Archive for 'Applications - Government'
Long-Term Economic Trends
If subsidized prediction markets are implemented, one of the most useful would be one that forecasts long-term economic trends. Policy debates frequently center around questions of the long-term economic outlook. For example, the political parties may debate the consequences of current spending for the budget deficit and the accumulated debt. Although the Congressional Budget Office […]
Market-Based Safety Regulation
Perhaps the most obvious potential application of predictive decision making is in the area of government safety regulation. Like many countries, the United States regulates safety in a wide range of contexts. The Occupational Safety and Health Administration (OSHA) regulates workplace safety, and the Federal Aviation Administration (FAA) and Transportation Security Administration (TSA) regulate different […]
Permit Trading Systems
Market-based safety regulation has much in common with permit trading programs. In emissions trading programs, for example, the government assigns to each regulated entity a pollution allotment for a particular pollutant, often based on past usage.32 The government then allows each entity to achieve its allotment in whatever way it thinks best and also allows […]
Utility Regulation
Prediction markets sometimes might be useful not only in conjunction with permit trading systems but also in conjunction with other market-oriented devices such as auctions. Consider, for example, Harold Demsetz’s proposal to use an auction as an alternative to traditional regulation of utilities such as electricity or cable television providers. Traditionally, utilities have been regulated […]
Merger Analysis
Because the analysis of planned mergers inherently involves projections into the future, conditional prediction markets that forecast consumer surplus could help. Currently in the United States, the Antitrust Division of the Department of Justice and the Federal Trade Commission (FTC) preclear proposed mergers. One of the agencies, depending on factors such as the […]
Interim Decision-Making Markets
Predictive decision making can be used to predict not only events that are contingent on a particular decision, but also what a decision might be. We have already seen that prediction markets can forecast decisions (see Chapter 4). The merger analysis example can be viewed as predicting a decision, namely, the ex post measurement of […]
Review of Administrative Agency Policy Decisions
The goal of preventing administrative agencies from making ideological decisions is not a new one. Under the Administrative Procedure Act, a federal court in a proper challenge can strike down a regulation if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”7 Interpreting that provision, the U.S. Court of […]
Predictive Cost-Benefit Analysis
A simple approach to deciding on the payouts for a normative prediction market would be to commit to asking the later decision maker whether he or she agrees with or disagrees with the particular decision. Assuming that the ultimate evaluation of the decision occurs a long time after the market has run its course, however, […]
Review of Administrative Agency Legal Decisions
The hard-look doctrine represents only one form of judicial review that courts perform in assessing the decisions of administrative agencies. In addition to considering whether the agency’s decisions are supportable as a policy matter, a court reviews the agency’s factual determinations,22 as well as whether the agency’s decision is legally permissible. This second inquiry is […]
Evaluation of Administrative Officials
Normative prediction markets help neutralize ideology by making recommendations that are ideologically balanced and independent of incumbent officials. An alternative strategy for reducing the impact of ideology on administrative decisions would focus on inputs rather than outputs, on the […]