If you don’t know how futarchy works, read this first.
In the 5th century BCE, thousands would gather on Pnyx, a hill west of the Athenian Acropolis. The roughly five to six thousand male citizens would gather in the amphitheater and debate political issues in assemblies called Ekklesia.
These weren’t men in the upper classes of society. They were regular citizens involved in a bold new governance model: voting on laws that would change their society. For the first time ever, citizens had a voice in their society.
The benefits of the new system proved to be so great that this new concept of “democracy” eventually got adopted in other entities such as the Roman Republic.
As the Republic of Rome grew, it became impractical to have all citizens assemble in one place frequently and vote on each and every policy. So a new concept was born: representatives.
It wasn’t that the Romans no longer had a voice in the government. Now, they just had to make one decision occasionally, and you would hope that the representative you chose to fight for you would stay true to their word and listen to what you have to say.
This system, representative democracy, was much easier from a logistical standpoint and it maintained the same integrity of citizens being able to make important decisions. Not only did it make the decision making process more efficient, there were real advantages to a representative system over a direct democracy. For example, many citizens didn’t have the patience to vote on each issue for hours on end, but Senators, whose entire role in society was to make these decisions, had a greater amount of time to deliberate and weigh options. This created more effective policies that were most likely better ways to govern than the policies being approved under direct democracy.
In addition, representatives (who were hopefully better decision makers than the general public), were also able to maintain longer-term plans where they considere how different policies interacted with each other. Representatives also created a clearer structure of accountability, meaning that rather than diffusing policy decisions across thousands of voters, you’d be able to know who was radical and who was on your side.
I believe some of these advantages might hold true for futarchy, the system of government contrived by Robin Hanson in which participants vote on values, but bet on beliefs.
Instead of betting on individual policies, participants would bet on whether electing a specific official to make policy decisions would increase the previously defined national welfare metric.
This could be a refined and streamlined way to do futarchy. I’m not trying to reject the original ideals of futarchy, I just think it may be better to apply it in a different way.
Acknowledging that prediction markets are the most epistemically powerful forecasting tool that has ever existed, we should look at how to optimize their power.
A price of a decision market is “decided” by the collective forecasting abilities of the entire society, but with better forecasts naturally weighted higher because they have better incentives. As we know, the best forecasts are compound and multi-faceted, containing many different outcomes and events that could happen in a given scenario.
This means that a single pair of decision markets that forecast whether a policy should be enacted have to incorporate not only the casual effects of the policy being implemented, but the effect that other policies being implemented will have (weighted on how likely they are to be implemented).[1]
By that same logic, a pair of markets deciding whether a leader should take office incorporate the effects of all of the policies they are likely to implement, and we essentially end up capturing the same information.
So if the two systems are fundamentally equivalent, what’s the advantage of representative futarchy? I see it as a liquidity issue.
Rather than having thousands of little illiquid markets for each suggested policy, having occasional markets that forecast the overall effectiveness of a leader voting for policies in a congressional assembly offer the possibility to provide a significant amount of capital as subsidy into each market, thereby strengthening the quality of the market’s system.
The forecasting system remains the same, yet representative futarchy allows for deeper, higher quality markets.
So maybe it’s time to vote on values, but bet on judgement.
If you don’t know how futarchy works, read this first.
In the 5th century BCE, thousands would gather on Pnyx, a hill west of the Athenian Acropolis. The roughly five to six thousand male citizens would gather in the amphitheater and debate political issues in assemblies called Ekklesia.
These weren’t men in the upper classes of society. They were regular citizens involved in a bold new governance model: voting on laws that would change their society. For the first time ever, citizens had a voice in their society.
The benefits of the new system proved to be so great that this new concept of “democracy” eventually got adopted in other entities such as the Roman Republic.
As the Republic of Rome grew, it became impractical to have all citizens assemble in one place frequently and vote on each and every policy. So a new concept was born: representatives.
It wasn’t that the Romans no longer had a voice in the government. Now, they just had to make one decision occasionally, and you would hope that the representative you chose to fight for you would stay true to their word and listen to what you have to say.
This system, representative democracy, was much easier from a logistical standpoint and it maintained the same integrity of citizens being able to make important decisions. Not only did it make the decision making process more efficient, there were real advantages to a representative system over a direct democracy. For example, many citizens didn’t have the patience to vote on each issue for hours on end, but Senators, whose entire role in society was to make these decisions, had a greater amount of time to deliberate and weigh options. This created more effective policies that were most likely better ways to govern than the policies being approved under direct democracy.
In addition, representatives (who were hopefully better decision makers than the general public), were also able to maintain longer-term plans where they considere how different policies interacted with each other. Representatives also created a clearer structure of accountability, meaning that rather than diffusing policy decisions across thousands of voters, you’d be able to know who was radical and who was on your side.
I believe some of these advantages might hold true for futarchy, the system of government contrived by Robin Hanson in which participants vote on values, but bet on beliefs.
Instead of betting on individual policies, participants would bet on whether electing a specific official to make policy decisions would increase the previously defined national welfare metric.
This could be a refined and streamlined way to do futarchy. I’m not trying to reject the original ideals of futarchy, I just think it may be better to apply it in a different way.
Acknowledging that prediction markets are the most epistemically powerful forecasting tool that has ever existed, we should look at how to optimize their power.
A price of a decision market is “decided” by the collective forecasting abilities of the entire society, but with better forecasts naturally weighted higher because they have better incentives. As we know, the best forecasts are compound and multi-faceted, containing many different outcomes and events that could happen in a given scenario.
This means that a single pair of decision markets that forecast whether a policy should be enacted have to incorporate not only the casual effects of the policy being implemented, but the effect that other policies being implemented will have (weighted on how likely they are to be implemented).[1]
By that same logic, a pair of markets deciding whether a leader should take office incorporate the effects of all of the policies they are likely to implement, and we essentially end up capturing the same information.
So if the two systems are fundamentally equivalent, what’s the advantage of representative futarchy? I see it as a liquidity issue.
Rather than having thousands of little illiquid markets for each suggested policy, having occasional markets that forecast the overall effectiveness of a leader voting for policies in a congressional assembly offer the possibility to provide a significant amount of capital as subsidy into each market, thereby strengthening the quality of the market’s system.
The forecasting system remains the same, yet representative futarchy allows for deeper, higher quality markets.
So maybe it’s time to vote on values, but bet on judgement.
According to some, this is a fundamental flaw of futarchy.