Decision Markets. IEEE Intelligent Systems, 14(3):16-19, May/June, 1999.
Would crime rates rise or fall if more citizens could legally carry hidden guns? This is a question of fact, and as such theory suggests it should be relatively easy for rational agents to combine information on such a question into a consensus estimate. Yet humans normally seem to have great difficulty sharing information on such questions, and so come to widely divergent views. Speculative markets, however, seem to do a remarkable job at helping humans share information. I propose that we try using speculative markets to aggregate information on important policy questions.
Consensus By Identifying Extremists. Theory and Decision 44(3):293-301, 1998.
Given a finite state space and common priors, common knowledge of the identity of an agent with the minimal (or maximal) expectation of a random variable implies "consensus", i.e., common knowledge of common expectations. This "extremist" statistic induces consensus when repeatedly announced, and yet, with n agents, requires at most log2 n bits to broadcast. In contrast, other statistics known to induce consensus by repeated announcement unrealistically require broadcast message lengths unbounded in the private information of agents.
Correction to McKelvey and Page, "Public and Private Information: An Experimental Study of Information Pooling". Econometrica 64(5):1223-1224, 1996.
The above mentioned article errs in calculating the consequences of myopic-rational responses to the payoffs used in the experiments it describes. This invalidates the article's proof that myopic responses are a non-myopic Bayes-Nash equilibrium. Thus we lack game-theoretical predictions to compare with the experimental results.
Could Gambling Save Science? Encouraging an Honest Consensus. with Reply to Comments. Social Epistemology 9(1):3-33,45-48, 1995. First appeared in Gambling and Commercial Gaming: Essays in Business, Economics, Philosophy, and Science, ed. W. Eadington & J. Cornelius, 399-440. Institute for Study of Gambling and Commercial Gaming, 1992.
The pace of scientific progress may be hindered by the tendency of our academic institutions to reward being popular, rather than being right. A market-based alternative, where scientists more formally "stake their reputation", is presented here. It offers clear incentives to be careful and honest while contributing to a visible, self-consistent consensus on controversial (or routine) scientific questions. In addition, it allows funders to choose questions to be researched without choosing people or methods.
Comparing Peer Review to Information Prizes - A Possible Economics Experiment. Social Epistemology 9(1):49-55, 1995.
The methods of experimental economics may help the science studies community to better understand how our scientific institutions influence our rate of scientific progress. To make vivid the possibilities, this paper suggests a specific experiment, comparing a simple version of journal peer review to "information prizes", a simple market mechanism.
Buy Health, Not Health Care. CATO Journal 14(1):135-141, 1994.
To cure health care, give your care-givers a clear incentive to keep you well. Make sure that when you lose, they lose, and just as much. Buy lots of life and disability insurance from your care-givers, and have a third party, unable to act against your life or health, pay you to be the beneficiary. (A simple game-theoretic model illustrates this proposal.)
Can Wiretaps Remain Cost-Effective? Communications of the Association of Computing Machinery 37(12):13-15 1994. Appeared in CPSR Sourcebook on Cryptography, July 1993, and in The Electronic Privacy Papers: Documents on the Battle for Privacy in the Age of Surveillance, ed. B. Schneier & D. Banisar. John Wiley and Sons, 1997.
An economic analysis suggests that it is not cost-effective to attempt, as the Clipper chip and the FBI Wiretap bill do, to preserve U.S. police wiretaps in the face of recent technological change. (Longer summaries appeared in Privacy Forum Digest 2:18, and in Risks Digest 14.56)