Thin markets, or markets where there are few buyers and sellers, will be less accurate. Thin markets are often more volatile (prices shift rapidly) and less efficient or accurate than liquid markets, where there are many buyers and sellers. Policy-oriented prediction markets could become much thinner for policies that are complicated or which do not affect the interests of sufficient numbers of people or of sufficiently rich people.[12]
For instance, if a policy is technical and affects only, say, the agricultural practices of a specific area, there may not be enough natural interest in it, and all but a few people may believe that it is not worth their time to learn the details of how the policy would affect welfare. As a result, the final prices would be based on very little information: the best guesses of a few traders.
I’m not sure this argument holds up:
If there is an agricultural practise that will be effected the poeple in that area can bet on the market. Unlike voting for a general political campaign, they will have a big impact on the result. They will have good incentives to bet in order to change the result or to offset losses in the case it goes badly.
This doesn’t seem worse than status quo. Decision are already made on the basis of a few people’s opinions, often without any sense of track record that the profit and loss here would provide.
I’m not sure this argument holds up:
If there is an agricultural practise that will be effected the poeple in that area can bet on the market. Unlike voting for a general political campaign, they will have a big impact on the result. They will have good incentives to bet in order to change the result or to offset losses in the case it goes badly.
This doesn’t seem worse than status quo. Decision are already made on the basis of a few people’s opinions, often without any sense of track record that the profit and loss here would provide.