Randomization Fixes Futarchy Bias

Updated: 2025.10.02 19D ago 1 sources
Decision‑conditional markets can become biased when one option is canceled and information arrives before the choice, causing prices to reflect selection rather than causal impact. Hanson argues this 'decision selection bias' can be mitigated by letting informed decision‑makers trade, announcing decision timing immediately before acting, or conditioning on randomized choices so prices can be read causally. — It offers concrete governance design rules for using prediction markets to guide public decisions without misreading biased prices as causal estimates.

Sources

Futarchy's Minor Flaw
Robin Hanson 2025.10.02 100% relevant
Hanson cites his 2006 guidance ('permit insiders to trade,' 'announce timing just before decisions') and responds to Dynomight/Bolton Bailey’s coin‑market experiments that show biased prices with cancelation.
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