Good protocols tend to form persistent Schelling points in spaces of problems worth solving, around solutions good enough to live with – for a while. And surprisingly often, they manage to induce more complex patterns of voluntary commitment and participation than are achieved by competing systems of centralized coordination.

The rational expectation and thelearning-from-price literatures argue that equilibrium prices are accurate becausethey reveal and aggregate the information of all market participants. The MarketSelection Hypothesis,MSH, proposes instead that prices become accurate becausethey eventually reflect only the beliefs of the most accurate agent. The Wisdomof the Crowd argument,WOC, however suggests that market prices are accuratebecause individual, idiosyncratic errors are averaged out by the price formationmechanism

0.506 (0.532)

For the 12 studies with an original p < 0.005, 10 (83%) replicated. For the 12 studies with an original p > 0.005, only 1 (8%) replicated. Further work is needed to test if prediction markets outperform predictions based only on the initial p-value, to test if the market also aggregates other information important for reproducibility.

known to be effective: prediction markets