Executive summary: Futarchy, a governance system combining prediction markets with democratic goal-setting, can reflect non-linear utility functions and risk preferences of citizens, but may lead to excessive risk-taking if unrealistic goals are set.
Key points:
Futarchy allows citizens to vote on goals while prediction markets determine policies to achieve them.
Risk-averse traders in prediction markets will price in their preferences, leading to policies that better reflect societal risk attitudes.
This feature challenges the assumption that prediction market prices directly reflect probabilities.
Concern: Voting for unrealistically high goals may lead to riskier policies being chosen against citizens’ true preferences.
Possible solution: Implement separate markets for different outcome levels and incorporate societal risk aversion into decision-making.
Despite potential issues, futarchy likely improves upon current governance systems.
This comment was auto-generated by the EA Forum Team. Feel free to point out issues with this summary by replying to the comment, andcontact us if you have feedback.
Executive summary: Futarchy, a governance system combining prediction markets with democratic goal-setting, can reflect non-linear utility functions and risk preferences of citizens, but may lead to excessive risk-taking if unrealistic goals are set.
Key points:
Futarchy allows citizens to vote on goals while prediction markets determine policies to achieve them.
Risk-averse traders in prediction markets will price in their preferences, leading to policies that better reflect societal risk attitudes.
This feature challenges the assumption that prediction market prices directly reflect probabilities.
Concern: Voting for unrealistically high goals may lead to riskier policies being chosen against citizens’ true preferences.
Possible solution: Implement separate markets for different outcome levels and incorporate societal risk aversion into decision-making.
Despite potential issues, futarchy likely improves upon current governance systems.
This comment was auto-generated by the EA Forum Team. Feel free to point out issues with this summary by replying to the comment, and contact us if you have feedback.