I’m not as hot on the Hayekian principle as economists were, but I don’t see how any of the factors you suggest would be different between a prediction market and a normal stock market.
And normal stock markets are pretty good at allocating ressources, up until the moments where everything goes berserk, so there’s no reason to suspect that prediction markets would be much different.
The comparison in the post wasn’t between prediction market prices and stock market prices, it was between prediction market prices and ordinary prices for goods and services. I hadn’t thought about it before, but it seems to me that the points made in the post about prediction markets apply to stock markets as well.
Note that this isn’t an argument that prediction markets (or normal stock markets) don’t work. It’s an argument about whether they have this particular “Hayekian” virtue.
I’m not as hot on the Hayekian principle as economists were, but I don’t see how any of the factors you suggest would be different between a prediction market and a normal stock market.
And normal stock markets are pretty good at allocating ressources, up until the moments where everything goes berserk, so there’s no reason to suspect that prediction markets would be much different.
The comparison in the post wasn’t between prediction market prices and stock market prices, it was between prediction market prices and ordinary prices for goods and services. I hadn’t thought about it before, but it seems to me that the points made in the post about prediction markets apply to stock markets as well.
Note that this isn’t an argument that prediction markets (or normal stock markets) don’t work. It’s an argument about whether they have this particular “Hayekian” virtue.