by Shi-Ling Hsu
Cato Institute
July 24, 2014
Regulation
An impartial party – the market – can weigh in on the climate’s future. Current climate prediction models are plagued by uncertainty and large error bars, yet they remain an essential part of climate research. Climate scientists have struggled to deliver a credible message to the public and thus have not moved the American electorate in a substantial way. Each side of the debate accuses the other of manipulating science to suit its ends. A prediction market – that is, a market of contingent contracts that pay off in accordance with the outcome of some future event, as in betting – could harness the vast amounts of climate science in ways that even the most sophisticated climate models do not. More importantly, a prediction market could impose some discipline on the processing and interpretation of climate science, as it would become too costly for scientists making predictions to sustain a disingenuous position.



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