Hanson on Truth

Idea Futures
Even massive documentation, however, does not obviously make it much hard to lie and
self-deceive about abstract reasoning and conclusions. If you are biased in your reasons for
preferring a political candidate, or for believing in a scientific theory, it seems hard to catch
that bias just by looking at where you’ve been and what you’ve said.
For disputes that can eventually be resolved, it turns out that we have a social institution,
feasible today, that is capable of eliminating much of this bias, producing relatively accurate
unbiased estimates. That institution is idea futures, i.e., betting markets, also known as
prediction markets or information markets (Wolfers & Zitzewitz, 2004; Hanson, 1999, 1995).
The basic idea is that people who have to put their money where their mouth is form
beliefs in the equivalent of harsher weather, where they prefer more functional clothes. Those
who know that they don’t know tend to shut up, and those who don’t know that they don’t
know lose their money and then shut up. Those who remain know, and know that they
know.