Futures Markets Are Noted for Accuracy
March 7, 2007 | Salt Lake TribuneIn an editorial, Sabastian Mallaby, concludes that amateur traders on the UNIVERSITY OF IOWA's political futures market predict elections more accurately than professional pollsters. He writes about how four decades ago, a Chicago economist named Eugene Fama proclaimed that financial markets are efficient. The march of this thesis from the fringe to the mainstream is one of reason's sweetest triumphs. Despite periodic bouts of wantonly irrational investor behavior, most people now accept that financial markets -- indeed, all markets in which people trade views about the future -- are the least bad way of processing information. Today, markets are used to predict everything from influenza outbreaks to the sales of a new Harry Potter book. The editorial originally appeared in the WASHINGTON POST.
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