Max Local Property Values

a proposed policy market

by Robin Hanson

Let us take total local property values as a proxy for the value of decisions made by local governments. If they do good things, people will want to move into and do business in the area. Given this, here is a way to use a market to make local "government" decisions.

Imagine a locality is trying to make some decision, with a small number of alternatives identified. One could create one market per alternative, which created a market estimate of future average property values conditional on that alternative being chosen. (More precisely, the market would manage trades of cash for locality-real-estate shares, trades which are called off if that alternative is not chosen.) Then the rule could be, the alternative is chosen whose market estimates the highest property values.

Robin Hanson July 24, 1996
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