Futarchy: vote on values, bet on beliefs

http://hanson.gmu.edu/futarchy.pdf

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Shall We Vote on Values, But Bet on Beliefs?
Robin Hanson
Department of Economics
George Mason University
September 2000
Abstract
A key question to ask about any social institution is how well it generates, aggregates, and
distributes information. Speculative markets seem to do well at this, while familiar democratic
institutions, relying in part on academic institutions, seem to fail in many ways. So perhaps we
should consider "futarchy," a form of government where betting markets become our primary
common source on matters of fact. Democracy would say what we want, while speculators
would say how to get it. That is, elected representatives would formally define and manage
an after-the-fact measurement of national welfare, while market speculators would say which
policies they expect to raise national welfare. If we are willing to recommend policies that
macroeconomic data suggest are causally related to GDP, it seems we should be willing to
consider futarchy. Using an qualitative engineering-style approach, this paper considers thirty
one design issues with futarchy, and then presents a relatively specific proposal which responds
to those concerns.

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