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September 09, 2006


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Stock price based prediction markets won't work in a transitional setting such as you envision. There is no stable experience with broad democratic participation from which to make the stock price predictions you ask for.

How would your idea differ from letting institutional investors take the lead to propose, and then lobby for change: an explicitly political model?

You have a good idea, it just doesn't advance the ball in this situation. The idea that there should be some good non self-interested method of screening out frivolous proposals is helpful; the mechanism you have chosen is not viable in achieving that goal, however.

Why not set a time period for majority votes on all proposals to operate? Then, in the interest of conserving corporate assets used to present proposals, use the experience of that 2 stage process to construct a prediction model for weeding out losers.

The difference here is that broad participation in corporate decisionmaking, is a normative benefit that rests on grounds independent of stock price. A prediction model based primarily on stock price does not capture the externalities of firm conduct that may be transmitted by a more explicitly political model that includes a broad, more transparent and democratic participation regime.

I suspect there is a market for democratic participation in corporate decisionmaking, akin to the Iowa primary results, that might properly be the focus of such a model.

So, the argument is not over whether to use prediction markets, but over whether stock price ought to be the exclusive focus.




Forgive my ignorance, but is the post above supposed to mean something to the readers of this blog? My crude translation program (from Apple) says this reads: "shock absorber". If so, I don't get it. If this is intended as a comment, please elaborate, in English if possible.


The Golden Rule of blogging

"LAK": the use of insults is not appropriate for this forum. Please refrain from this in the future or we will not allow you to post comments. We can disagree, constructively or not, without resorting to name calling."
Todd Henderson, Sept 12, Univ of Chicago Faculty Blog

Joan A. Conway

Kenneth Lay Remembered.

Does anyone don't believe that Ken Lay controlled Enron?

Board, who?

Joan A. Conway

Does anyone not believe that Ken Lay controlled Enron?

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