<
https://www.techdirt.com/2026/03/19/prediction-markets-promised-better-information-instead-theyre-creating-powerful-incentives-to-corrupt-information/>
"There’s a concept in economics known as Goodhart’s Law, often summarized as:
“When a measure becomes a target, it ceases to be a good measure.” The idea,
originally about monetary policy, has proven remarkably durable across domains.
When you attach high enough stakes to a single metric, people stop trying to
accurately reflect reality and start trying to game the metric. Schools teach
to the test. Banks shuffle risk off their balance sheets to hit capital ratios.
Hospitals reclassify patients to improve their reported outcomes.
Prediction markets were supposed to be immune to this. The whole pitch — the
reason people like me found them
conceptually interesting for years — was
that because participants are putting real money on the line, they’d have
powerful incentives to seek out and act on
true information. Financial
stakes, the theory went, would filter out noise and bullshit and produce a
hopefully decently accurate signal about the probability of real-world events.
The wisdom of crowds, sharpened by the discipline of the wallet.
What most people didn’t think through was the obvious corollary: what happens
when you attach $14 million in stakes to a 150-word blog post by a war
correspondent, and the gamblers decide it’s cheaper to threaten the journalist
than to accept they made a bad bet?"
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
