If (On Court Resignations, Nominees, and Information Markets)
If there is no serious misstep in the next couple of weeks, Samuel Alito will be confirmed as a Supreme Court Justice, and Sandra O'Connor's iffy resignation will become real. I think such "ifs" are provocative. First, we should wonder about the future of contingent resignations. O'Connor is sitting on the Court now, and this sort of lame duck could encourage strategic behavior (both in confirming a new Justice and in deciding cases on the Court), though a straightforward resignation, and an 8-member Court, might simply have raised other strategic possibilities. Leaving aside the idea that the Court could have 10 or some other number of members, the contingent resignation might next be taken one step further: a Justice could resign subject to the confirmation of a successor by a certain date. Thus, a conservative Justice might offer to resign, contingent on the sitting Republican President appointing someone and seeing that nominee confirmed. We might squirm if we observed such a conditional offer of resignation, but it is only one step beyond where we are now. Another would be a resignation contingent on seeing (and approving) the identity of the next nominee. That seems almost beyond imagination.
But would it be beyond imagining for the Senate? If Senators are inclined to be strategic, then we should expect some no votes where there is an expectation that the next nominee would be more to the voters' liking. And we should expect yes votes where the current nominee is perceived as more desirable than the likely replacement nominee. In turn there is the question of how Senators can gain information about likely subsequent nominees. Tradesports.com tells us that there is a 78% chance that Alito will be confirmed, but it does not yet provide information as to who is likely to be nominated if Alito is not confirmed. It is difficult to develop markets about such contingent information, for they will be thin. In principle, there could have been a market in the likelihood of Alito or McConnell or Gonzalez being confirmed even as Miers was making the rounds in the Senate. One market would predict Miers's likelihood of confirmation; another would predict Alito's, and so forth. Putting these markets together would, for better or worse, likely change the actual votes on the first nomination - which would in turn be reflected in the market prices.
Some markets are thick enough that no contingent markets are desired. For example, there is a market in oil and it reflects the likelihood of hurricanes and wars and so forth. There is also (now) a developing information market in such things as the likelihood of a war or a hurricane itself. If I want to aggregate dispersed wisdom and information as to the likely price of oil in the event of a particular war, I can reason from the behavior of these two markets. But where there is no thick market, I might need, and pay for, an information market that focused on a particular contingency. Budding information markets may the best predictors of the next Republican nominee for President, and they might also be good predictors of the likelhood that more than 100,000 U.S. troops will be in Iraq in November 2008. But we might expect a separate market on the question of who is the most likely nominee in the event that there are (or are not) that many troops in Iraq. It will be interesting to see whether such contingent information markets flourish, much as it will interesting to see the evolution of contingent Supreme Court resignations.