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Saturday, 2 September 2006
3 more terms


When agents with actuator abilities enter a population of agents engaged in trading of prediction securities, these information markets can turn into Actuator Markets.


While prediction markets act as information aggregators they simultaneously act as Incentive Distributors.


Moral Hazard is a term used to describe this phenomenon, but from the point of view of an interested party: a frame of preference. Economics (when describing things as they are) is amoral, so cannot take sides on a moral debate. Thus the term moral hazard is fine for the insurance industry from which the term was borrowed, but not sufficient for an amoral discussion of the process. Instead we speak of Actuator Incentives.

Posted by jonathan-m-katcher at 8:54 AM EDT
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