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A senior high quality person, who I trust, who recently spent several years trying to promote prediction markets, reports the following relevant quotes:
A G7 government official and advisor to their head of state:
“The prediction market experiment was a success, but we will not proceed with the programme as it interferes with our ability to shape the narrative around the direction of government policy.”
A leading bank CEO:
“Your crowdsourced real-time risk radar is remarkable, but we will not use it here. The only person who tells my board about unexploded bombs in this bank is me and people who answer directly to me.”
A partner at a prominent US-based global management consultant:
“The objective truth should never be more than optional input to any structural narrative in a social system.”
A Ivy League Management Guru:
“The problem with prediction markets is that they are the irritating precocious young child, entirely unfiltered socially, and yet forever talking about the elephants in the room that it may or may not be appropriate to talk about.”
Perhaps you can see the pattern here.
Prediction Market Quotes
I get most of this actually, but it seems that it should be possible to tackle by redirecting the flow of information. In the CEO example, let him alone consult the market, and choose what to do with the information. Yeah, not stellar in terms of efficiency gains, but far better than nothing (and there is an argument to make for retaining the current corporate form, which empowering the Board too much will disband).
Why would these elite individuals to embrace a tool that may subvert their oracular vision? Would one expect Ned Ludd to embrace automation? Would one expect Lenin to embrace the market? If prediction markets do convey a competitive advantage this feedback is evidence, if not proof, that the competition for these elite positions is more political than market based.
Another thought is the theory that humans decide first, then rationalize the decision. These prediction markets can't be relied on to provide the "right" rationalizations. Flunkies or consultants are pretty good at that job already.
A prediction market might be useful for companies and institutions in competitive environments. There prediction markets may face a different challenge. Being subject to competition, these companies may already have methods to efficiently gather information from the workforce, i.e. bottom up, and "prediction markets" may have to compete to supplant them in the marketplace.