Corporate prediction markets have received a lot of press over the last few years, as an exciting new trend. But press coverage has a serious bias: it mostly only mentions success. Hundreds of companies have considered and rejected prediction markets, and many others have started them and then stopped, at least for a while. But news focuses on companies that are still trying them, and relatively happy.
But isn't Robin's point that we're biased to demand too little of such schadenfreude news? People want to hear a certain message--prediction markets represent powerful technological development, or offshoring is bad--and so restrict their demand for reports arguing the opposite. Yet people often complain that the media is too sensationalist, nativist, or even futurist. The market won't supply enough counter-biased reporting--does this observation support government intervention?
A common corrective, assuming the original story has legs, is a subsequent story by a different reporter debunking, or at least qualifying, the original. In the case of offshoring, the original stories focused on all the companies taking up offshoring. Now stories are appearing that gleefully focus on companies that tried it but have since retreated because of problems. Schadenfreude, pleasure at someone else's misfortune, may be a useful well-spring for counter-bias.
You're clearly right. But what policy, if any, should be implemented in response to your lesson? If we're trying to overcome bias, it seems that more public media is part of the solution. This approach would help eliminate the biases you describe by pooling the collective anti-bias interest of the otherwise biased electorate. But supplying more public broadcasting is not equivalent to demanding it, and so we are back to the paternalism debate: can and should government regulate those sources of media that reflect our "good news" bias?
Adrian,
But isn't Robin's point that we're biased to demand too little of such schadenfreude news? People want to hear a certain message--prediction markets represent powerful technological development, or offshoring is bad--and so restrict their demand for reports arguing the opposite. Yet people often complain that the media is too sensationalist, nativist, or even futurist. The market won't supply enough counter-biased reporting--does this observation support government intervention?
A common corrective, assuming the original story has legs, is a subsequent story by a different reporter debunking, or at least qualifying, the original. In the case of offshoring, the original stories focused on all the companies taking up offshoring. Now stories are appearing that gleefully focus on companies that tried it but have since retreated because of problems. Schadenfreude, pleasure at someone else's misfortune, may be a useful well-spring for counter-bias.
You're clearly right. But what policy, if any, should be implemented in response to your lesson? If we're trying to overcome bias, it seems that more public media is part of the solution. This approach would help eliminate the biases you describe by pooling the collective anti-bias interest of the otherwise biased electorate. But supplying more public broadcasting is not equivalent to demanding it, and so we are back to the paternalism debate: can and should government regulate those sources of media that reflect our "good news" bias?