Hal Finney wrote:
>Regarding Robin's paper, http://hanson.gmu.edu/deceive.pdf...
>
>What does the existence of markets and market prices say about the
>existence of disagreement? Why don't people pour all of their resources
>into markets where they disagree that the current market-clearing price
>is correct? ...
>Can this be explained because people aren't as confident in their beliefs
>as they like to think that they are? They're "sure" that the stock is
>underpriced or overpriced, but when it comes time to put their money down,
>suddenly they are not so sure.
>If so, then perhaps the existence of an IF market would make people more
>aware of their true (lack of) certainty about their beliefs.
I think this is right. People indulge in irrational disagreement more
when the personal penalties are less. When money is at stake, they self-
deceive less. This is part of what I had in mind years ago when I said
that idea futures gave people an incentive to be "careful and honest" in
what they say. Honest not only with others, but also with themselves.
Robin Hanson rhanson@gmu.edu http://hanson.gmu.edu
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030-4444
703-993-2326 FAX: 703-993-2323
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