Put Your Money Where Your Mind Is

A site that I've been reading more and more, TCS Daily had this article, Put Your Money Where Your Theory Is (borrowing Tradesports' tagline). The writers' idea is that academics that back up their predictions in cash will either be more accurate in their predictions or more moderate in predicting worst case scenarios to avoid the embarrassment of being so wrong. This one is worth a skim.

http://www.tcsdaily.com/article.aspx?id=030106E

"Moreover, prediction markets are non-ideological: the future happens the way it happens. Thus although Julian Simon beat Ehrlich, there are now scientists concerned about global warming who want global warming skeptics to put their money where their mouths are." - This would be entertaining.

"Will teen pregnancy be higher in 2010? Teens are apt to have better information about this than sociologists." - This example seems to be plain wrong. From a bettors perspective I'm not sure if I would be willing to trade based on the "inside tips" and four year predictive powers of my 15 year old cousin.

The market can restrain people since their predictions would be backed up with cash but the real incentive would be accuracy. For reasons of practicality (carry costs, liquidity) the bets will be made for prestige not profit.